Talking with TaxSpeaker (Video 104)
1. Many of our firm’s clients are receiving the Economic Injury Disaster Loans over the past two weeks. Two things concern me. (1) none of the SBA lenders in my area know anything about these rare loans, and what is permissible to use the funds for. Almost everyone wants to pay off credit cards or other lines of credit with the disaster loan funds, but refinancing debt does not appear to fit the eligibility criteria. Do you know? And (2) I got a copy of the loan agreement for the EIDL for a client and it says that “within 3 months of client’s year end they must furnish an Accountants Review Report with their financials.” You have got to be kidding me, what an enormous financial burden and waste of time. Would this requirement likely be waived?
2. In the absence of PPP guidance on the definition of an “owner-employee” with respect to an S Corp, what advise are you giving your clients? I have a number of S Corps with a 100% owner employing a spouse where the owner’s compensation is limited in by the $15,385 cap or by “8/52 of 2019 rule” during the eight week period. I was hoping I could shift some of the owner’s wages to the spouse so I can increase loan forgiveness but am worried that attribution rules will be issued in the future.
3. From last week's questions regarding the definition of gross wages for the forgiveness application - are pre-tax contributions to a SEP IRA (withheld from the paycheck) considered part of gross wages since it appears that pre-tax contributions to a Section 125 plan are not?
4. I was on another webinar today put on by a large bank and they implied that a self employed (Sch C or F) would only have their payroll (net Sch c/f) 8/52 forgiven. I don’t and can’t find this interpretation anywhere else, nor does the original loan forgiveness paperwork imply this (the rent/int/ and utilities is added to the 8/52 of net income to determine the loan forgiveness amount). So in the case of someone with $100,000 net income who had received the $20833 and would pay themselves $15,384, they are saying there is no way to spend the balance of $5449 or have it be forgiven. Do you see where this interpretation might be coming from or is stated in the regs? Or did I overlook something in the new law that changed the SE’s forgiveness calculation?
5. Are you familiar with any tax due date monitor software. That will list out the due dates of your clients, and help insure that we don't miss any due dates.
6. Clients are finally getting emails from SBA for approval of Eidl Loans. Since response was so slow in approving loan back in April my client took a $100,000 loan from bank so they could reopen. Now they have been approved for the EIDL for $100,000 and they would like to payback the bank loan since bank interest rate is much higher. Cannot find a definitive answer if they would be allowed to use the EIDL funds to do this. Any thoughts? Thank you.
7. Concerning 1099-LTCs. If a 1099-LTC reports reimbursed expenses and the Qualified box is not checked, do you report it as a reduction of medial expenses on Schedule A or is it Other Income on Form 1040 Line 8? What if the 1099-LTC reported it paid on the Per Diem basis and the Qualified box is not checked, reduction of medical expenses or Other Income? When do you use 8853 to report info on the 1099-LTC?
8. Bob, will you have a separate engagement letter for the PPP loan forgiveness process?
9. I have an LLC currently taxed as a partnership that is changing to a sole member due to divorce. I believe that I need to get a new Tax ID Number for sole member, Is there anything else I need to consider on this ownership change?
10. I have a client with a Schedule C who is contributing to a Roth 401(k) through the LLC. Does the Roth contribution reduce the QBID?
11. Can you address this question in your Webinar as well. I’ve been told that you don’t include “Bonuses” in the payroll for either the period from Jan-March or the period from the date of the loan through the 8 week period, which is now 24 weeks, but I’ve never seen that in anything I’ve read. Is that true or not ?
12. For a June 30 year-end client, assuming 100% of a PPP loan will be forgiven and all the information for making that calculation is available at June 30, when should an organization record the transfer of the loan to a grant?
• At June 30 because all the information is known for calculating the forgiveness, or
• Not until the official decision is rendered by the SBA, whenever that might be