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schirallicpa

PPP loan - owners salary

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Small S-corp employs both stockholders of the company.  I thought that when you calculate the payroll for the period, you have to exclude their current payroll and use 2019 figures to ensure they are not inflating their salary for the purpose of qualifying for forgiveness.

So now I'm looking at their salaries for 2019 - and they bonused themselves in 2019 during the period, and 2019 gives them a much bigger payroll figure.  

Can anyone clarify this for me.  

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Isn't it 8/52 of their salary, capped at $100,000/year and limited to 2019? If one owner earns $90,000 annually in 2020 but $80,000 in 2019, then 8/52 X $80,000 is that owner's max forgiveness. (But, I haven't filled out a forgiveness application, yet.)

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Bonuses are allowed and included  both for calculating the the PPP Loan Amount and PPP Loan Forgiveness, as long as their annualized compensation doesn't exceed $100 K.

It sounds like you are concerned that the inclusion of their 2019 bonus generates a loan amount which will exceed the amount that can be forgiven.

If that's the case, then they can either return the excess or convert to a loan.

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Oh, your case an owner earns $80,000/year in 2020 but earned $90,000 with his bonus in 2019. Then 8/52 X $80,000 is still his max forgiveness. If his loan was larger, based on 2019, then he has the two choices cbslee said.

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7 minutes ago, Lion EA said:

Isn't it 8/52 of their salary, capped at $100,000/year and limited to 2019? If one owner earns $90,000 annually in 2020 but $80,000 in 2019, then 8/52 X $80,000 is that owner's max forgiveness. (But, I haven't filled out a forgiveness application, yet.)

I'm so confused.....

His total 2019 salary was 163800 and other guys was 81007.

During the 8 week period, his was 15400, and the other was 10097.  Over the year, he will exceed 100000.

so either way, his is 8/52 of 100000.

other guy is 8/52 * 81007 = 12462.62 or 10097 which ever is lower.

Am I right?

 

 

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If I'm following which was 2019 vs 2020, I think you're right. I haven't taken numbers through the forgiveness application, yet. I expect more guidance. But, they've pretty much laid out the case for owner-employees.

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