Talking with TaxSpeaker VIDEO 100!!! (5.12.20)
1. One of the many questions on PPP forgiveness is what amount of Profit Sharing can we used in forgiveness. I have many clients who are paying their 2019 now in 2020 but I would assume they can't use the whole amount in payroll cost but only 8 weeks worth even though its for 2019? (Total paid /52x8?) Does anyone have some input on this? Also for 2020 Profit Sharing which isn't figured until year end, how can we use that as part of payroll cost, possibly contribute approx. 8 weeks worth now?
2. I have a client who annually has made a nondeductible contribution to her Traditional IRA and converted it to her Roth IRA. In early 2019 she did the same. In October 2019 her financial advisor advised her to rollover some money she had a 401(k) from a previous employer to an IRA. For 2019 she received a form 5498 reporting the value of her Rollover IRA. Is there any support for the argument that since the original nondeductible contribution and conversion to the Roth occurred prior to the Rollover IRA being created that it could be considered as nontaxable or is the fact that as of 12/31/19 she had an IRA with a fair market value mean that a percentage of the conversion amount is taxable in 2019?
3. Can a 100% shareholder of an s-corp use his salary in the payroll retention tax credit calculation?
4. Do you have any recommendations for individuals who have not received their stimulus check yet and the Get My Payment tool says it does not recognize their information? They received a refund on their 1040 via direct deposit so no reason why they would not have yet.
5. Are incarcerated felons entitled to a stimulus check? They perform menial jobs and receive a W-2 although much less than the filing requirement. If they filed a 2019 tax return would they get a stimulus check?
6. In your newsletter dated 5/5/2020, you say any expenses paid with PPP that are forgiven, is not deductible. How do we make the accounting entry for wages if they are not deductible because of the forgiveness of the loan? I’m having a hard time wrapping my head around this whole issue and clients are blowing up my phone to know how to treat this forgiveness element and now not being able to deduct the wages.
7. A couple of clients have parents that passed away in mid 2019 or in one case early this year. The parent received a $1,200 stimulus payment and they are wondering what they should do with it?
8. I have done some research and I am not finding an answer on whether a company can receive a PPP loan and also receive the sick leave credit and the childcare leave credit.
9. I am 100% owner of an S-Corp. I do pay myself wages. I work out of my house. My "office" has taken over around 35% of my house. I think I read that I'm not allowed to pay rent to myself from the S-Corp. Is that correct? I was told once a long time ago that the business could pay the mortgage, utilities, etc. because it was to their benefit to have me here. That was long before the office was in my house. Is there any way to take money out of the business towards any of the expenses of the house? I've looked all over the IRS website and can't find anything. Or can you tell me where to find the information?
10. What type of documentation do self-employed (Schedule C) individuals have to provide to prove proper usage of the PPP Loan to have it forgiven?
11. How does a sole proprietor with only 1099'd contractors use a PPP loan? They got the advance on the EIDL, so does that negate part of the 'forgiveness' of that much of the PPP loan?
12. Due to the PPP funding changes has Taxspeaker CPA’s experienced any of their client lenders inquiring on the need for the PPP funds? We have had a couple clients notify us that their banks have sent out notifications in which they need to verify the need/prove economic hardship and has no other source of monies to fund payroll during COVID.
13. It’s your favorite Topic for 2020, the PPP Loan. We just watched a webinar on what expenses can be forgiven and they said, expenses needed to be prorated to the 8 weeks from funding. So funding on April 27th with a Monthly payroll on 5/1, for April work performed, only the payroll for 4/27-4/30 would qualify for forgiveness? We understood that we would need to have a partial month payroll in June because the funds needed to be spent within the 8 weeks but this accrual for payroll, interest, rent, utilities, etc for forgiveness was not something we saw or see clients being able to do themselves. Is that webinar correct and this headache just got bigger? Or was he being too cautious and I don’t need to invest in headache medicine?