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PPP and Schedule C

Technical topics regarding tax preparation.
#1
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Alexandria VA
Client just notified me that she applied for and received a PPP loan last night. She is self employed. The self employment started in December of 2019 - she made a little over $4,000 in that month. The bank is giving her roughly $10,000 based on her Schedule C income for the first two months of 2020.

1. is that allowable? I mean, i guess it must be, because that's what the bank did.

2. i thought the forgiveness calculation was based on the 2019 Schedule C - when i last looked at this it was the net schedule C income multiplied by 8/52. so even if the bank gave her money based on her 2020 income, will her forgiveness be limited to the 2019 Schedule C calculation?

Brian Davis
 

#2
Joan TB  
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1326
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Location:
Texas
Per SBA Q&A #14:
An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.


Per the revised PPP Forgiveness application:

If a 24-week Covered Period applies, does not exceed 2.5 months’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $20,833 per individual
 

#3
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Location:
Upstate, NY
Surprised the bank took the application. Most had cutoffs of mid last week. From what I read, she needed to have funding by today, not application in by today. Will be interesting to see if she gets the loan
 

#4
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17
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1-Apr-2020 3:53pm
Location:
Alexandria VA
Joan TB wrote:Per SBA Q&A #14:
An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.


Per the revised PPP Forgiveness application:

If a 24-week Covered Period applies, does not exceed 2.5 months’ worth of 2019 compensation for any owner-employee or self-employed individual/general partner, capped at $20,833 per individual



But wouldn't the 2.5 months worth of 2019 compensation for an owner-employee be - in this case - a really small number (because she wasn't in business in 2019 but for a month). Even if she took the full month of activity from 2019 - call it $4,000 - and she got a loan of $10,000 - it seems like there isn't much forgiveness there.
 

#5
RowTax  
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Florida
The deadline for applying was extended till August 8, 2020
 

#6
Joan TB  
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Texas
I read that the Senate voted yes on the extension, but last I heard the House hadn't voted on it yet, and the President would still have to sign it. So not official yet.
 


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