DANRVAN

52 minutes ago, jklcpa said:

 and not put it on the 4797 at all.

Sorry, I did not catch that part.

I think there is a good case to put it on 4797 since it was not sold in the normal course of business.  Might also save on SE Tax.

3 hours ago, JohnH said:

they're providing $1,000 per employee, even though the legislation says nothing about this limitation.

Actually John, the section 1110(e)(3) of the CARES ACT says "the amount....shall not be more than $10,000."

$10,000 was the upper limit, there was no lower limit set.

3 hours ago, jklcpa said:

ending inventory would be reported as zero

That doesn't sound right if you are going to report on 4797.

For example:

Beg inv =   10,0000

purchases = 20,0000

ending inv  = 12,000

goods available for sale =  10,000 + 20,000= 30,000.

if we record end inv as zero then cost of sales = 30,000 when in fact it was 18,000.

the 12,000 would then become basis for sale on schedule 4797.

I don't see why you would report sale on schedule C at all if it is going on 4797.

On 4/12/2020 at 7:19 AM, Gail in Virginia said:

gave half his stock to a related party to comply with majority stockholders wishes.

On 4/12/2020 at 7:19 AM, Gail in Virginia said:

persuaded a majority of shareholders that taxpayer had to be forced out of ownership.

Sound like there might have been involuntary conversion but I think you will need evidence that he was forced into the transaction.

Was there a buy/sale agreement?

Was a lawyer involved?

2 hours ago, Abby Normal said:

I've read it too, and I believe the above parts are not excluded for the self-employed. The part you quoted just tells you how to calculate the wage, and it doesn't say that the other components do not apply.

What are your thoughts on self employed showing a loss?  That is one scenario I see where owners' draws need to come into play.  Health insurance as you mentioned above would be part of that.

As I read it there is a case for basing the the computation on draws by an owner vs strictly by SE net earnings.

per section 1102 of the ACT:

‘‘(bb) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from selfemployment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as prorated for the covered period;

20 minutes ago, cbslee said:

Yes, I have seen other articles that they have been limiting the EIDL loans to the original $ 10,000 Grant plus $ 25,000.

And I had a call yesterday inquiring about a $300,000 loan.........

On 4/9/2020 at 4:00 PM, peggysioux5 said:

file as single with no dependents just to get tax return electronically filed and then file an amended. 

You have a long road ahead in obtaining the dependents and related tax benefits for your client.  The amended process will add months to the delay under normal circumstances.

You will have to prove that your client had custody for more than 1/2 of the year.  But that phase will not begin until you file and then receive a letter from the IRS requesting documentation. 

I have been working on a similar case for two years (for a 2017 return) and recently filed for an appeal.

One thing you might have in your favor is that the IRS tends to favor the mother.

1 hour ago, Terry D said:

This credit can be refundable as well if the employer meets either of the two requirements.

That falls under section 2301 of the CARES ACT.  

Important to note that it can not be used by participants in the PPP.

The decrease in PPP forgiveness by the amount of the EIDL Grant, heard about it but could not find it in the CARES ACT.

It is not mentioned in sec 1106 titled "Loan Forgiveness" as  I would expect.

Instead it is buried deep in the bowels of sec 1110 "Emergency EIDL Grants.

sec 1110 (e) (6) UNEMPLOYMENT GRANT.—If an applicant  that receives an advance under this subsection transfers into, or is approved for, the loan program under section 7(a) of the Small Business Act (15 U.S.C. 20 636(a)), the advance amount shall be reduced from  the loan forgiveness amount for a loan for payroll  costs made under such section 7(a).

43 minutes ago, BulldogTom said:

, and 400K for Rent, Utilities, Insurance etc

only for health insurance

Tom,  forgiveness of PPP is spelled out in sec 1106 of the CARES ACT, but some parts of it are not clear.

Here is my understanding of it:

75% of the PPP must be for "payroll cost".

$350,000 is 75% of $466.667, so you can spend the difference of $116,1667 for other qualified purposes.

$466,667 is the max available for forgiveness. That amount is reduces by reduction of average FTEE's and for total wages from the base period. 

So if the FTEE reduction is 20% and the salary reduction is 25%, then it appears the $466,667 could be reduced to $280,000.  It is unclear if in fact both the FTEE and  AVERAGE WAGE reduction will apply together, but that assumption must be made until we get some guidance on forgiveness as promised by the SBA.

it is also unclear if the exception for "restoring" ave FTEE's and wages by June 30 means the employee's must be made whole for the amount of wages in the base period.

1 minute ago, DANRVAN said:

.

EIDL Grant Application Notes.pdf 463.71 kB · 1 download

 

 

Whoops, just realized you are talking PPP instead of EIDL

On 4/5/2020 at 10:47 AM, Lion EA said:

and use the CT Diocese's EIN. None of that sounds right to me.

Me neither.

I applied to today for our parish following guidance form our diocese which I have attached.

Entered n/a for most ownership and ssn questions.

This comes from a Catholic Diocese but that should not make any difference.

EIDL Grant Application Notes.pdf

2 hours ago, Edsel said:

would appear the employer could be painting themselves into a corner.

Unfortunately true for some.  Once behind on payroll tax deposits usually always behind.

See section 2302 of the CARE ACT,  on page 71 and 72.   https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf

Basically it is a deferment, cannot be used by PPP recipients who receive loan forgiveness.

There is also a payroll tax credit available to certain employers under sec 2301 of the act, not sure exactly how that is going to tie in.

https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequenty-Asked-Questions.pdf?j=270307&sfmc_sub=279354653&l=2398_HTML&u=8865422&mid=7306387&jb=846&utm_medium=email&SubscriberID=279354653&utm_source=NewsUp_A20Mar345&Site=aicpa&LinkID=8865422&utm_campaign=Newsupdate&cid=email:NewsUp_A20Mar345:Newsupdate:18-point+FAQ:aicpa&SendID=270307&utm_content=Special

This link came from an AICPA release this evening.  Still no guidance to the mess in Care Act sec 1106 as it relates to Loan Forgiveness.

Just did one for our Church,  indication was given that the actual processing of the application would begin within one week.

50 minutes ago, Medlin Software said:

A death during 2020, that person should still be eligible, as far as I have seen.

I agree, there is assumption that deceased wife's share of credit will be allowed on final joint return for 2020; and no reduction of advanced credit based on 2019 1040 showing as deceased.  But to be sure, client is going to wait until check is in hand based on 2018 return.  

21 hours ago, Lion EA said:

I thought the reconciliation does not go below zero on the 2020 return.

That is what I have read, no repayment.

I have a case where client's wife recently passes away.

Client wants to hold off on filing 2019 until the advanced credit is paid on 2018 return; in case the advance is reduced based on 2019 return indicating wife deceased.

As in other cases, I have made it clear that to him that although it appears he will not have to repay the excess, there is no guarantee of that.

22 hours ago, TKTax said:

  Q&A on thecollegeinvestor.com states that a surviving spouse that was MFJ will have to payback any  stimulus money received  for the deceased  husband. I could not find it in any of the resources.  Anybody else see anything on this?

The only reference I have seen to joint filing is in 6420(e)(2) which basically say that in the case of a joint return 1/2 of the credit will be attributed to each individual.

https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf

This is the most authoritative source.

I found answers here that could be not be found anywhere else.

PPP is covered in section 1102 page 6.

Loan forgiveness  section 1106 page 19

EDIL section 1110 page 26.

I have some anxious clients to talk to next week, this has given me a better understanding to help them.

15 hours ago, Lion EA said:

I love the title Interim Final. Is that an oxymoron

Putting that aside,  since this document  is destined for the FEDERAL REGISTER, it is the closest we have seen to an authoritative source.

There have been a lot of articles published with conflicting information.  This answered a lot of my questions.

1 hour ago, Burke said:

This category is depreciated over 15 years.

Fences used in a farm or ranch operation can be 7 year property.

2 hours ago, cbslee said:

I am referring to what the local bank is using for it's screening criteria

I was wondering why the bank asked the question.  It does't seem right that they could give preference to a business that has lay offs and rehires vs one that is trying to maintain and keep form laying off; since either way they could qualify.