How you gonna write an update on the new acts?

Technical topics regarding tax preparation.
#41
Wiles  
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The retention credit is not available to businesses receiving Small Business Interruption Loans. I know this includes the new forgivable Paycheck Protection Program loans. Does it also include the already existing Economic Injury Disaster Loans?
 

#42
rkrcpa  
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MWPXYZ wrote:If you are concerned with forgiveness, it seems that the contractor would have to pay those employees to obtain the credit, as well as some rent, utility, and interest expense. So, as long as the contractor pays the employees for not working for 8 weeks, which is the intent of the law, the loan would be forgiven. Tax free. Perhaps the expenses are deductible.

With that number of employees the contractor will have to personally guarantee the loan since the loan amount would exceed $200,000.

The retention credit act gives you a mere $5,000 credit per employee.


Payroll for 8 weeks (with benefits) would be about $2,000,000 for field labor. They're only trying to cover office salaries during the shutdown, a total of 5 people.

Like I said, seems like this program is not a good fit for this circumstance.
 

#43
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The retention credit is not available in conjunction with a certain loan:

(j) Rule for Employers Taking Small Business Interruption Loan.--If an eligible employer receives a
covered loan under paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)),
as added by section 1102 of this Act, such employer shall not be eligible for the credit under
this section.
The EID Loan (and associated grant) is under 7(b)
 

#44
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Post 42 - If the loan is forgiven and the payroll is still deductible AND the employees are worth retaining for when life starts up again, maybe the Paycheck Protection Program might be a real benefit.

The deduction availability seems to be a question. And is a discussion on the forum here.

And I am just a tax guy. This SBA stuff is new to me. Folks who have been through major hurricanes, tornadoes, earthquakes, etc probably have a better handle on this.
 

#45
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It looks like the EID loan is NOT the way to go. The Paycheck Protection is the one they'll want.
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#46
zl28  
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The owner can pay themself their normal salary for 8 weeks? and then have the debt forgiven?

I have a client who only has one employee.
 

#47
Wiles  
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JR1 wrote:It looks like the EID loan is NOT the way to go. The Paycheck Protection is the one they'll want.


I posted this on another thread. Too many threads...

https://www.rubio.senate.gov/public/_ca ... nesses.pdf

If I have applied for, or received an Economic Injury Disaster Loan (EIDL) related to COVID-19 before the Paycheck Protection Program became available, will I be able to refinance into a PPP loan?

Yes. If you received an EIDL loan related to COVID-19 between January 31, 2020 and the date at which the PPP becomes available, you would be able to refinance the EIDL into the PPP for loan forgiveness purposes. However, you may not take out an EIDL and a PPP for the same purposes. Remaining portions of the EIDL, for purposes other than those laid out in loan forgiveness terms for a PPP loan, would remain a loan. If you took advantage of an emergency EIDL grant award of up to $10,000, that amount would be subtracted from the amount forgiven under PPP.


Based on this, I think we should tell our clients to apply for the EIDL loan now. Get the $10K grant. Then refinance into the PPP loan later, if applicable. It seems PPP loans will be made available starting 4/3/20. https://home.treasury.gov/system/files/ ... -Sheet.pdf
 

#48
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Based on this, I think we should tell our clients to apply for the EIDL loan now. Get the $10K grant. Then refinance into the PPP loan later, if applicable.


I hesitate to completely agree with that…
 

#49
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Yes. Me too now :(

Clients want answers now and I thought this gave some clarity, but then I re-read "at which PPP becomes available". If they can refinance at anytime then this would give them something to act on today.

Another option is to apply for the EIDL and use it to cover everything except payroll.
 

#50
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Which will move quicker - the "local" bank or the SBA?

How long will the Coronovirus influence on the economy last? In your area? The known cases have not appeared in our county. Yet.

So, maybe a client is not in a hurry, but believes that the effect will be long term for his geographic area or industry.
And needs more than 2.5 times monthly payroll.

Is the business shut down for now and employees on unemployment making more than the client pays them due to the feds chipping in an extra $600 per week? And getting paid now.

Is the client required to pay some employees affected by the virus under HR6201 and thus have payroll costs, or a chunk of them, covered. Does HR6201 cover those employees laid off last week?

Are PPL expenses deductible? - see Nilodop's thoughts on IRC 265.

What new laws next month muck up today's strategy?

Every client will be different. some already are really different.
 

#51
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Thanks MWP! Good to know we only have these 7 questions to consider as we move through the decision tree. ;)
 

#52
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I looked at the application. It refers over and over to payroll costs, but this is supposed to be available for the sole proprietor, who doesn't have payroll, but rather takes the net income as compensation. So how do you answer the questions about the amount of your payroll, and what documentation would you provide to show the net income lost because of the virus? And when it talks about mortgage interest, if the sole prop has their office in their home, does the mortgage interest on their home loan qualify for this?
 

#53
Pitch78  
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Jeff-Ohio wrote:
Based on this, I think we should tell our clients to apply for the EIDL loan now. Get the $10K grant. Then refinance into the PPP loan later, if applicable.


I hesitate to completely agree with that…



One concern is that the $350B is not enough money for everyone and that the banks will prioritize the PPP loans because the others already have their money. If that is the case, re-financing may not be an option unless they bump the amount. If you plan to re-finance make sure you are talking to your banker now.
 

#54
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Thanks MWP! Good to know we only have these 7 questions to consider as we move through the decision tree. ;)


They say that each Coronovirus question inflicts 3.5 more questions on average!
 

#55
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MWPXYZ wrote:Every client will be different. some already are really different.


I am sending out a mass email to get some initial questions answered and have realized this exactly.
 

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