NC & PPP

Technical topics regarding tax preparation.
#1
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Well, this appears to be the week. The General Assembly is getting ready to vote, and the Governor has already said he will pass the bill. The bill will allow expenses paid with PPP funds to be deductible. What the heck?! I have a couple of fiscal year ends that will have to have two years of returns amended. Add in all of the calendar year-end entities, and all of the related shareholders returns. This is just CRAZY!! Every one of these politicians need to be sent home if this thing passes! No reason this could not have been handled when PPP was first initiated!
 

#2
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Do you have a cite???? I see that he vetoed bill 116 in July.

Has he had a change of heart???

Thanks in advance.
 

#3
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The bill is SB 105 and it is around page 590-595 I think. Cooper had a news brief today saying he would sign it. Said there was more good in the bill than bad so he will sign it and work on correcting the bad later.
 

#4
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I think the chances of passage are high. Only eight senators voted against and the names are not at all surprising. As I understand it, there have been intensive negotiations between the Governor and the General Assembly for some weeks and the result is the bill that is up for a vote today.

Here’s a thought. Efiling ends this weekend. So do we have amended returns to do in tax season? Yeuch.
 

#5
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SumwunLost wrote:I think the chances of passage are high. Only eight senators voted against and the names are not at all surprising. As I understand it, there have been intensive negotiations between the Governor and the General Assembly for some weeks and the result is the bill that is up for a vote today.

Here’s a thought. Efiling ends this weekend. So do we have amended returns to do in tax season? Yeuch.


Thanks seaside and sumwun.

Ill wait ti see when it passes but I can see examples of an S Corp with a loan of say 50K…. Amending the S and the personal to get back around $2,500…. Almost not worth it. But yes, I loathe the idea of doing amended returns.

Why not just paper them??? It’s not a big deal. But I’m not awake quite yet.
 

#6
Gr8ful  
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Thanks for heads up. I think the paper amendments are now about 10+ months on average to be processed so the wait and eFile may be the better option.
 

#7
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I tend to agree Gr8ful. It offends me that we have had to wait so long for this. Exactly why it could not have been dealt with in the “skinny bill” in the spring is beyond me.

I see that the taxed passthrough entity legislation is now starting in 2022, which gives us a few weeks to plan looking out the windshield rather than in the rear view mirror.
 

#8
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SumwunLost wrote:I see that the taxed passthrough entity legislation is now starting in 2022, which gives us a few weeks to plan looking out the windshield rather than in the rear view mirror.


The idea of amending makes my stomach queasy, especially if by paper. The processing times for even eFile have been insane. Going on 8 weeks and I have one client that has not received back nearly $80k from IRS and $7k from NC.

What is source of this "taxed passthrough entity legislation" you referenced? I have not been able to keep up with changes...
Last edited by CornerstoneCPA on 17-Nov-2021 9:01am, edited 1 time in total.
 

#9
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At this point, I'm thinking I'd put off amending until after the 4-15-22 deadline. I just don't see having much time between now and the end of the year to get all of them done. Once tax season hits, definitely not doing amendments!
 

#10
sjrcpa  
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FYI-efiling of individual returns stops Nov 20 but entity efiling will still be open until sometime in December.
 

#11
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I did not know that, sjr. Thanks for the info.

Cornerstone, see p594 of the bill as concurred to by the Senate yesterday. Section 42.5.
 

#12
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#13
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Sounds similar to what NY did with Partnerships. I glossed over the details of the NC Bill for passthrough entity taxation--what exactly is the perceived benefit of making such an irrevocable election? I did not see anything about rates but it could be buried in another section. Is this for simplification for owners of such entities, reduced rates relative to individual tax in the state...?
 

#14
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The idea is to get around the SALT cap. The last version of the bill I looked at had it as an annual election - ie, pay the tax by April 15th. Lots of work for us if this passes and is not pre-empted by federal changes to SALT deductions.
 

#15
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Ah, that's right...I couldn't recall the details of NY but I now recall commentary about SALT caps.

Ugh...
 

#16
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The NC budget has passed the Senate. Off to the House for one vote this afternoon and one tomorrow, then to the Governor, who has promised to sign it.
 

#17
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The budget has passed the NC House. 104-10, so bi-partisan - I believe there are about 50 democrats out of 120. So now it's all over bar the signing.
 

#18
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The Ratified bill is up - link at https://www.ncleg.gov/BillLookUp/2021/s105. Tax provisions start at page 588. it does still need to be signed by the Governor and to be assigned a Session Law number.
 

#19
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Thanks for the update Sumwun! To me, this truly shows how incompetent these politicians really are! Absolutely no reason this should/could not have been implemented before all of these returns with PPP/EIDL were filed.
 

#20
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Seaside, I had the video feed on this morning. I could not believe how they were all patting themselves on their collective backs for reaching a bipartisan deal. I will be writing to my state senator (also the minority leader) and state representative, pointing out that substantive provisions have been passed well after the filing deadlines.

Looking at section 42.4 starting at page 591, it appears that the above-the-line charitable contribution is now allowed 42.4.(a) sets the conformity date as 4.1.21. 42.4.(b) only decouples from the %-of-AGI for an itemized deduction. 42.4.(c) does not include an add-back for above-the-line contributions. I'm trying to make sense of this whilst eating lunch so may have missed something.

I'm trying to figure out if we will need a software update before doing amended returns. I imagine not, as the PPP/EIDL add-back on the NC return does not flow from federal, at least in Drake.
 

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