BulldogTom

I think you could make that argument. But is it really worth it? What was the loss? How much will you charge for the return and how long until the service processes it? Is that worth it when they will get the same deduction when they file this year's return in 2021? I ***think*** you have a position to take if you want to go down that road. Tom Modesto, CA

How would you quantify the loss? In and earthquake for fire, there is a loss that can be calculated (cost to replace less insurance reimbursement). You can't take a loss for profits not earned. You can't take a loss for wages lost. So what could you use as the basis for the amount of loss from the virus? I think it is a very interesting question, but in reality, I don't know that there is a practical way to get to an amount of loss. Tom Modesto, CA

It is tough unless cooked properly, similar to venison, but not as gamey in flavor. Usually heavily seasoned if BBQed (not my favorite). Best way to cook is slow simmered in a chile Colorado or chile Verde. I have only eaten it when prepared by Mexicans. There may be other ways to cook goat in different parts of the country. Tom Modesto, CA

Thank you

What does that mean? I am getting old I guess. I don't know all the new fangled acronyms. Tom Modesto, CA

Damn, we need some clarity on these things. I appreciate all your comments. I don't know how a company is supposed to spend 75% of the PPP funds and then not know what is qualifying to get forgiveness. Tom Modesto, CA

In CA, you are required to carry WC on every employee. It is a state mandate as strictly enforced as PR tax. Part of the reason CA passed AB 5 to classify independent contractors (uber, lyft, other gig workers) as employees. They want them WC protected while working. Tom Modesto, CA

This is a real scenario, and a real taxpayer, but the numbers are made up. I think it is obvious that WC costs are legitimate Payroll costs for PPP forgiveness. TP business renews their WC policy every year. They have the option of paying the full year policy at renewal, or financing the policy by making a down payment of 20% and paying the remainder over 8 months. In their books, they post the full year policy amount as a debit to Pre-Paid insurance and record a credit to Insurance Payable if they finance or cash if they pay in full. In prior years, the decision to fully pay or finance has been driven by cash flow considerations, so there is a history of exercising both options. Each payroll, they calculate the actual amount of WC expense and post to the income statement by debiting WC expense and crediting Pre-Paid Insurance. So they do know the actual amount of WC expense they are incurring each payroll. Taxpayer receives a PPP loan and the renewal of the policy lands in the 8 week period. Please comment on the scenarios below. For simplicity, lets say the policy costs $52,000 per year (1K per week). 1. TP pays 20% ($10,400) and makes 2 more payments ($10,400) in the 8 week measurement period, can they deduct the amount paid on the policy ($20,800) or the amount of WC calculated during payroll processing ($8,000). 2. TP decides to pay the entire policy cost from their PPP funds, do they get to use that amount ($52,000) or the payroll amount of expense was calculated on the payroll for 8 weeks ($8,000)? I know this should be asked of a banker, but I don't think they know either. Tom Modesto, CA

That would seem reasonable, but I can't find anything online that says you can use accrued payroll costs. Hopefully IRS will issue guidance that allows for incurred but not paid costs, but I am not comfortable with telling a client that we "hope" they can deduct the payroll that is accrued. Tom Modesto, CA

I think I found the answer. Must be used for expenses "incurred and paid" during the 8 week period. Tom Modesto, CA

Do you pay extra for it or is it included in your software package? I wonder if ATX will run it like the Fixed Asset module - extra cost to add it on? Tom Modesto, CA

Is the loan forgiveness calculation done on a cash basis or accrual? Does the tax return method of accounting play into this at all? For example - TP with accrual books and accrual tax return receives PPP loan of 100K. PR costs at the end of the 8 week period under accrual are 80K, but under cash are 70K because the last payroll check date lands one day outside of the 8 week period. Should the TP accelerate the PR to make sure it is actually paid to the employees or will the hours worked in the 8 week period be sufficient for the 75% testing threshold? Sorry if this has been asked before and answered. Tom Modesto, CA

You mean the client can sign the 8879 electronically? That is huge if true. Tom Modesto, CA

There was a little tongue in cheek in my post that did not translate very well without verbal nuance. Sorry about that. Tom Modesto, CA

So he can get paid for doing a return? Our services are not free...at least mine are not. Randall can choose to do things for free, but he did not cause the individual's issue, so why shouldn't he be paid for fixing it? Just my humble opinion. Tom Modesto, CA

Client emailed me. Administrator of his sister's estate. Check was made out to him and his deceased sister. Is not comfortable putting it back in the mail and checking the deceased box because he is sure the IRS will assume he is the decedent. He may not be wrong. Told him to not cash the check. Sit on it until this situation clears up and I can get some guidance from the IRS. Tom Modesto, CA

Because you are awesome like that. Tom Modesto, CA

Lion, I don't have an answer for that, but did not want you to think I ignored your post. The Client calling the FTB is going to be the best way to find out how to get a replacement check. But it is going to take a big boatful of patience to get through to someone there. A lot of the employees are homeschooling their kids and FTB is backed up just like every other CA government agency. If the check is complete, just ripped, they could try going to a check cashing establishment and see if they will cash the check. And if the check is complete, and she has mobile banking, she can take a picture of it and deposit that way. Or make the deposit in an ATM? Tom Modesto, CA

FYI - ATX is still not doing it correctly either. You have to fiddle around with the return to get it into the return as wages for EITC but not taxable for income (similar to military combat pay). IRS has not acquiesced to the court case that allows IHHS payments to be classified in this manner. That may (or may not) be the reason the software companies are not updating the software to handle the payments this way. However, they did process a refund for a client of ours with this situation. We cited the court case on the 1040X and they processed the refund. Tom Modesto, CA

I think that is a regional issue. In CA, the maximum amount of UI you can get per week is $450. And the workers who we furloughed don't get that much, closer to $300 per week. With rent on a 2 bedroom apartment at about $1800 per month, you can see that regular UI is not going to cut it for our workers. The extra $600 will really get them close, but not above, their normal wages in our area. I bet it is much worse for people in the major cities trying to get by on UI only. Tom Modesto, CA

Wasn't taking issue with you per se. It seemed like the tone of the entire thread was "businesses don't need this money", when in fact they do. Maybe I am just sensitive right now, because I see a failure of government at every turn in this crisis. The PPP was a good idea that died on the floor of big government and greedy bankers. And the people who are really suffering are my friends and colleagues at our company. Makes me feel guilty that I am still working when they are not. Tom Modesto, CA

Because the California EDD has not been able to update its computer systems to distribute the cash yet. CA UI is pretty much a hands off system in normal times. Employee gets laid off, files a claim online, the computer spits out a form to the employer who confirms the reason laid off and the wages earned. This normally happens during the 3 weeks it takes to get your first check. If the employer rejects the claim or the EDD thinks there is something fishy, they call the employee in for an interview and get hands on with the claim. Otherwise, it is a pretty automated process. Then 3 million claims came in over a 4 week period (10 times the normal volume). Add to that the self-employed who were never eligible before, and the number of employees at the EDD taking time off to homeschool their kids, and there is just a huge mess trying to get these payments out. The system was not updated to handle self-employed nor did they have time to update it for the extra cash from the CARES act. The Governor is not taking questions about it, the EDD is directing people to their websites because they can't handle the call volume, and no one knows for sure when the money will be distributed. Yesterday, the Governor outlawed protests at the state capital (for health reasons - much sarcasm intended by me). The constitution is only good for toilet paper in this state right now. Tom Modesto, CA

I disagree with the sentiment above. The company I work for is completely shut down except for accounting and Management (lucky me, only a 10% pay cut...so far). We furloughed 165 employees. Revenue is zero. But we still have to pay our leases for the building. We still have alarm systems, water bills, and the benefits for our employees. These obligations need to be paid. The owners have stopped taking draws, and are putting money into the company to keep it afloat. How are they supposed to pay their bills with no income from the company? And there are hundreds or thousands of "non-essential" companies like us who are in this same boat. If we stop paying our lease, how is the landlord going to pay their bills? While our employees are on UI, they are still not getting the enhanced amount. The Governor of CA threw 3 million people out of work, and was shocked when they all filed for unemployment? The CA EDD cannot keep up. The system requires that the employer verify the wages of the worker, but the businesses are shut down or working with less staff. A PPP loan would be awesome for us. We had great credit, until our revenues went to nothing. Who would loan to a company without revenue? And when this opens up, my projection for the company is at best break even for the year. Who is going to loan money to a company that is struggling? That is not how banking works. How are we going to get the funds for our planned expansion? We had projected to add over 100 jobs later this year when we built and opened our third facility, but that may not happen now, or may be delayed while we build back our profits and credit worthiness. Please tell the children of our hard working employees that they can't live the life their parents want to give them because they are "non-essential". Sorry if this is offensive, but there is a different side to this story. We cannot get a PPP loan, so our employees sit at home and our company withers on the vine. Not looking for sympathy, just explaining that there were good reasons for the PPP loan program. I just hope the scammers and leaches of the country don't get all the money instead of the companies who provide good jobs and benefits. JMHO. Tom Modesto, CA

I agree. When I was a young accountant I was working for a CPA with a doctor client. The client went to India on vacation in early December and closed his office. Returned from vacation in late January. Had a stack of checks in the mail that he deposited upon his return. The tax return was filed from the Doctor's accounting records that showed the deposited amounts as income. IRS audited when the income did not match the 1099's. CPA argued constructive receipt and lost. Had to adjust both tax returns (first year understated, second year overstated). I had to do the work on sorting out the check dates and tying them out to the 1099s so the income could be recorded to the proper tax year. Taxpayer was not trying to cheat, all the income was recorded, just in the wrong year. Cash basis taxpayer. Tom Modesto, CA

Me too. Tom Modesto, CA