PPP forgiveness reduction

Technical topics regarding tax preparation.
#1
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A TP received a 200,000 PPP loan.
He was supposed to spend 150,000 (75%) on payroll, but only spent 75,000. Which is 50% less than what he agreed to.
Assuming he only qualified for 50% forgiveness on payroll, does this automatically reduce rent, utility, etc forgiveness by 50%?

For example. Loan for 200,000. 150,000 payroll and 50,000 for rent, utilities, etc. He only spent 75,000 on payroll. Does what's eligible for forgiveness for rent, utilities, etc get reduced to 25,000?

I understand there are other factors to consider such as FTEE and pay reductions.
 

#2
Joan TB  
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Yes, rent,utilities, etc would be capped at $25,000 in your example.
The forgiveness app has it calculated this way:
$75,000 spent on payroll divided by 0.75 = $100,000 maximum forgiveness available.

If only $15,000 were spent on rent, utilities, etc. then - in this example - the forgiveness amount would be $90,000 since it is the lesser of the payroll plus rent, utilities, etc.
 

#3
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Location:
Florida
Joan TB wrote:Yes, rent,utilities, etc would be capped at $25,000 in your example.
The forgiveness app has it calculated this way:
$75,000 spent on payroll divided by 0.75 = $100,000 maximum forgiveness available.

If only $15,000 were spent on rent, utilities, etc. then - in this example - the forgiveness amount would be $90,000 since it is the lesser of the payroll plus rent, utilities, etc.


But if he spent $25000 on rent, etc, then he would max out forgiveness ($75000 = $25000) of $100,000. Is that correct?
 

#4
Joan TB  
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$75,000 spent on payroll divided by 0.75 = $100,000 maximum forgiveness available.


yes
 

#5
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Florida
Joan TB wrote:
$75,000 spent on payroll divided by 0.75 = $100,000 maximum forgiveness available.


yes


Thanks Joan. I just worked through the app.
 


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