JohnH

Ron: Here's what I've been pondering. Offered for critique or criticism. From an accounting standpoint, the funds are a loan from the bank, booked in the same manner as any other loan. So as long as that status remains, this is a loan payable on the books and the expenses are tax deductible. Forgiveness isn't guaranteed, so it's perfectly logical to retain it as a loan until forgiveness is certain. Now if a taxpayer requests & receives forgiveness in the same year and the bank relies on the SBA reimbursement to forgive the loan, then the offsetting entry would negate the expense as you have described. But if the taxpayer waits until Jan 2021 to request forgiveness, then the adjustment to income (or expense, as you see fit), would occur in 2021. Nothing is certain until the loan is actually forgiven. Depending upon the taxpayer's circumstances, it might be desirable to shift the income into 2021. (I could spin out a few scenarios where this would be applicable but that isn't relevant to this conversation) Now it's possible IRS may offer guidance on this before the end of the year. But it's a bit of an esoteric issue so they may not pay it much attention. In any event, this is my thinking right now given my understanding of the way this timing would impact a cash-basis taxpayer. It is somewhat similar to the tax treatment of a medical expense paid in 2020 and then reimbursed in 2021, at least in concept.

-> Subject: I'm being tormented to death by a few Sch C customers who want me to apply for loan forgiveness. In a couple cases, I didn't even assist with the application - it was done entirely by their bank. And now the bank doesn't want to file for forgiveness. <- Ron, when my clients ask me about applying for loan forgiveness at this stage, I just tell them it's too soon because SBA keeps moving the goal posts. I'll let them know when it's time. There are one or two who ask again, and I just tell them nothing has changed since our last conversation. I guess it all boils down to whether we run our practice or our clients run it. Besides, they've already received the money, derived the benefit, and the loan forgiveness is just an after-event formality. I've even wondered if it might be a good strategy for some cash-basis taxpayers to wait until after the end of 2020 to file for forgiveness, depending upon their business circumstances. (Still pondering this one)

The latest guidance from SBA, a FAQ sheet released on Monday Aug 3, helps clear up some (but not all), of the key questions which have been loitering in our minds these past few weeks. Here's a link, just in case you haven't seen it from another source and don't mind clicking on links. https://www.sba.gov/document/support-frequently-asked-questions-ppp-loan-forgiveness?utm_medium=email&utm_source=govdelivery

I appreciate all the well wishes. Feeling great now, continuing the weight loss (intentionally), and antibodies were very high on the first test. Already have my first appointment to donate Convalescent Plasma at the Red Cross on Aug 10. Will be able to donate every 28 days as I understand it. Maybe my antibodies will help someone else recover.

Most people who engage in this type of behavior on a grand scale can't resist bragging about it to their friends & associates. Somewhere in that crowd is often someone who isn't on board, who's worried about their own behavior, or who resent the fact that they weren't that "clever". So they retaliate by making a few phone calls to the relevant people. Or they hope to curry some favor so that their own issues might be overlooked. Anyone who's ever raised a teenager has probably seen this scenario play itself out in some way or another.

I always had allergy problems and/or bronchitis between Apr 15 and Aug 15. So the excuse on the 2688 was always "Due to recent tax preparer illness, additional time is respectfully requested to complete this return." That was my story and I'm sticking to it. Always got that magic "Approved" reply. (Remember how we had to file it in duplicate?" ) I agree with Lion, too. Extensions meant more money in my bank account because I could prepare more returns in 10 months than I could in 4. Plus I could live a more normal life in the first 4 and stop trying to be a tax martyr working until all hours of the night & sacrificing weekends.

Thanks for that info. What you described just illustrates how varied the outcomes can be, even among different age groups. I’m very interested in the antibody story as things move forward. I think there’s lots of speculation among the scientists based on something other than the data. I’m convinced it isn’t enough to know antibodies are present. The actual value need to be tracked, but they don’t have enough data to establish a baseline or relevant range yet. By the way, I lost 13 lbs which I needed to lose, but that isn’t an endorsement of the COVID diet.

Yes, that's a legitimate concern. Guess I'm going to be on high alert for any unusual symptoms anywhere in my body. I do happen to have a cardiologist appointment in 3 weeks. Going to lobby for a little more intensive testing. (I might even finally agree to that angiogram he keeps pushing.) But whatever the course in the future, it is what it is. I'm not losing any sleep over it. The thing I'm most curious about is whether there's any long-term immunity conferred, and whether it's limited. I'm gong to get weekly antibody tests, even if I have to pay, for at least the next 6-8 weeks. But plasma donations might come with free testing - haven't checked that out yet. If I wind up with immunity that would fit in with my plans to return to Myanmar and India on mission trips early next year, and frankly would have made it all worthwhile. I suspect those counties are going to be paying special attention to Americans at immigration - maybe even requiring documentation prior to departure.. (That's already happening in Europe)

Are you one of those who are saying "I don't know anyone who's had COVID-19."? Well, now you can change that statement. I thought I'd share with my friends and colleagues on this forum my experience of the past few weeks. We haven't shared this information beyond a few family members and close friends - haven't even shared it within our church (for some unique reasons) This is a little long, and probably too much detail. On June 26 I awoke with a deep cough, slightly sore throat, and low grade fever around 99.1. The next day the fever persisted and I began feeling very tired. Got tested on June 28. The next few days were pretty bad with fever bouncing around and peaking at 102. Dry cough, little or no taste, and general malaise. Didn't get my results back until July 4, but to no one's surprise I was indeed positive. The listless life and fevers continue until the night of the 11th, when I awoke at 3 am in a sweat because the fever broke. The next day I felt much better but then fever began to rise to 102 at bedtime, and broke again around 3 am. On the 13th day I felt great, and by day 14 one wouldn't have known I'd ever been sick. Today is day 19 and I'm still regaining strength, but feel wonderful. Already had my follow-up test and I'm now negative. Next steps will be voluntarily testing for antibodies and possibly donating plasma at the Red Cross if they want it. My wife also tested positive, but she NEVER HAD A SINGLE SYMPTOM. My doctor wasn't all that surprised and just said "Yeah, she's an asymptomatic carrier. We see this all the time." I'm 72, with stable angina, overweight, and I have "reactive airways", which means I get bronchitis easily. So I just assumed if I got the Wuhan Coronavirus I'd wind up in a hospital, probably on a ventilator, and with a poor prognosis. By the grace of God, I escaped all those dire outcomes. It was very unpleasant and a little scary, but all in all not much more stressful than a bad case of bronchitis. Medications? Mucinex and an occasional use of my Albuterol inhaler. Took one Tyleonol each of the two nights my fever hit 102. Other than that, I trusted my immune system and my body's built-in furnace to kill the virus. As my doctor reminded me, I'm one of the 99% who recover from this, so there's that perspective. But I also have the perspective of a cherished church member who died in a hospital on a ventilator. So what do I conclude from those two extremes? None of this is to minimize the risks of this illness, nor to predict the course of the illness if you or someone else happens to get it. And if that happens and you want to ask me any questions I'll be glad to provide even more detail. So I urge everyone to continue to be careful, take precautions, and know that it can happen, but it isn't an automatic death sentence.

I’ll bet the app is named GRRaze.

I've been telling my estimated tax filers to just file as usual (Apr 15, Jun 15, Sep 15, Jan 15), using something close to last year's figures unless there's a known reason to increase or decrease. We can make adjustments (if any) whenever the 2019 return is completed. Not much else to do given the current situation.

Yes, it's clear that the previous tax preparer didn't understand the proper treatment of clergy taxes. They seemed to have a rough idea of the end result, but they took an improper route to get there. As Margaret has pointed out, they probably got fairly close to the correct final numbers. So no harm, no foul. By taking the time to learn how to report clergy income and H&U allowance properly, you're doing the best job you can for your client. You're minimizing their chances of an audit and maximizing their chances of a "no change" result in the unlikely event one occurs. They're fortunate to have you handling their return going forward.

I think the bookkeeper should have no role in the calculation of the H&U allowance request, especially with respect to determining the FRV. The pastor should submit a H&U allowance request to the church based on his/her own calculations of actual vs FRV. After all, it's the minster (not the bookkeeper), who is ultimately responsible for what is reported on the tax return. My personal opinion & general rule is that if the minister is not pulling some portion of the H&U allowance back into taxable income, then the H&U allowance is set too low and tax savings are being left on the table. Bookkepeers often pride themselves in getting things correct to the penny, but that isn't the objective with respect to this clergy benefit. There are lots of suggested H&U allowance forms available online. One important point about the H&U allowance request - it should contain wording to the effect that it remains in effect until another request is submitted. That way, if a year slips by and everyone forgets to renew it, the old amount is still in effect.

That was an assumption I had made at the outset. But each of my clients who received a PPP reported the advance EIDL to the lender but it was not deducted from the PPP. They each received exactly 2.5 times one week's average 2019 qualifying payroll + benefits expenses. (one bank ADDED the advance EIDL to the PPP amount). Each of these banks collected the payroll info from the client, along with the advance EIDL info, and the bank calculated the PPP amount. I told each one that their loan forgiveness would not apply to the advance EIDL, so each would end up with a repayment amount (either a lump sum or a cheap loan). I've been quizzed about this advice, and perhaps the questions are due to clients speaking with people whose advance EIDL was deducted from the PPP. Is it the experience of others on this forum than the advance EIDL was deducted from the PPP before the funds were disbursed?

It's my understanding that the amount of the PPP available for loan forgiveness is automatically reduced by the Advance EIDL For example, an incorporated small business with 6 employees receives a $6,000 Advance EIDL through the original simplified SBA process. They subsequently receive a $50,000 PPP through their bank. The maximum amount subject to loan forgiveness is $44,000 (provided the percentage critera and all other loan forgiveness conditions are met). Is that correct?

This may not be in issue for your client, but for future reference remember that most real estate agent estimates only provide the FRV for the residence as it sits. There needs to be an upward evaluation to allow for what would be charged to a renter with the home being fully furnished and with all utilities & maintenance expenses paid. That can be a useful calculation in some situations.

I've seen several references her and in other places to "choosing the 8-week period OR the 24-week period." Just curious if anyone has a good explanation about why a PPP recipient woud elect to use the 8-week period. I can't think of a reason other than to "just get it over with".

Margaret and Lion provided excellent additional detail on the subject. I'll just add that your nephew's then CPA you referenced was handling it incorrectly. He likely achieved the same result, so there was no negative tax consequence. But he must have been doing some sort of override of the software (unless the return was prepared by hand...).

You shouldn't use Schedule C to report a H&U allowance. I don't use ATX, but I'll bet it has a worksheet for properly reporting the H&U allowance. The worksheet should require you to calculate the lower of 1) Actual amount designated, 2) Amount actually paid, or 3) FRV of house (fully furnished & all utilities paid). The amount designated is then taken directly to Schedule SE, and the amount taxable (if any) is added to W-2 wages & salaries with a notation of "Excess H&U Allowance). Drake has an excellent, intuitive worksheet for this. I assume the ATX worksheet is similar in layout & function to the one Drake uses. Calculating the H&U correctly is a simple process, but not necessarily easy the first time you use it. After the first couple of run-throughs it makes perfect sense.

If you have trouble texting, you can always set up an inexpensive bluetooth keyboard & connect to your phone to use when typing a lengthy text. But that's a little cumbersome when you're on the go. There are probably more exotic ways to print texts, but I just take a screen shot & email it to myself. Or just print the screenshot directly to a printer connected to the phone via wifi. I don't feel the need to keep a written record of every text. It all depends upon the seriousness of the conversation. Some of my texts lately looked a lot like like this: ->: "Do you know when my stimulus payment's going to be here?" A-> "I don't know. Here's the link to IRS ........"

Maybe your experience is different than mine, but I know for a fact I would lose some clients if I didn't text with them. Since I'm more or less on a retirement glide path, that isn't terribly important to me, but if I had 10-20 years ahead of me before retirement that would be a concern for me. Those millennials will eventually go somewhere else if you can't/won't communicate with them in the way they're accustomed. As it is, I'd probably get rid of certain of my clients if they didn't text (or at least email). So in my case there's a bit of a reversal of priorities on this issue.

I've run few scenarios, and it appears that all my clients will be fine with a stretch to 12 weeks or longer, even if the 75% rule doesn't change. (and provided they don't alter other aspects of the forgiveness requirements). That makes sense, since the original calculation was based on 2-1/2 weeks of 2019 payroll. It still seems to me that everyone who received the Advance EIDL and then a PPP will wind up with the Advance-EIDL dollar amount of their PPP unforgiven, if I'm understanding the rules correctly. That isn't a complaint - just a reality. It also makes sense if you follow the logic. But if Congress changes that, I wouldn't complain.

I agree completely with the strategy in your final paragraph. Once your clients know your voice mail response is slowest while email and text response is fastest, most will quickly shift to email and/or text. I always tell them I generally respond to email & text rapidly, but phone messages sometimes take a day or two. (Often the initial response is "I've seen your message and I'll get back to you ASAP", but that seems to satisfy them as they have the comfort of knowing I'm thinking about their question. And if their question truly is time-sensitive, I can get to it appropriately) With a couple of exceptions, even my oldest clients have become habitual email/text communicators. Many of my older clients have developed hearing problems (as I have), so I believe this is one reason they've jumped on the email/text bandwagon. More and more of these seniors tend to text, and these days you almost can't communicate with anyone under 45 unless you text. Since texting is fairly easy to preserve, I'm just as fine with it as I am with email. In any event, email/text questions tend to be more focused since they must spend a little time thinking about they're typing. (Same goes for my reply). Voice conversations frequently tend to be mind-dumps, useless background, or a rehash of what their brother-in-law told them about tax law. And when the email/text we don't waste a lot of time talking about the weather, COVID, riots, grandkids, our latest doctor visit, and all the other interesting diversions we're all subject to be drawn into. If anything, written communications can sometimes be too sparse, but that's pretty easy to rectify with a well-crafted response.

Thanks Bart. I think this link needs to be pinned as a resource at the top of this COVID-19 forum.

Sorry, I had a typo in my reply, but you got the point nevertheless. I meant to say "stating they have two employees when in fact they have none"