Talking with TaxSpeaker: Video 107
1. Can S Corp or LLC owners with salary/income in excess of $100,000 use 24/52 $46154 vs. 8/52 $15,385 if opt for the 24 week period?
2. We have a situation where an employee felt sick, went to the doctor, and was off 3 days waiting for his COVID-19 test results. The test came back negative, he feels better and is back at work. But, he wants us to pay him for those 3 days, are we required to do that?
3. Would the wife's wages of the S-Corp owner be considered owner's wages. I'm thinking under the rules of attribution that answer would be yes.
4. My firm has a client that is a cash basis S-Corp and their primary business is placing temp staffers (Staffing Company). When business slowed in March and April, they applied for and received a $900k PPP loan. Almost 100% of it was used for payroll purposes. Business has since “boomed” with reopenings and it looks like they’re going to have a banner year before consideration of $900k in payroll costs that will not be deductible due to using PPP loan forgiveness. They expect their Kentucky Unemployment fund to be depleted in 2020 anywhere between $150k to $200K. Kentucky allows employers to make a voluntary payment to replenish their unemployment fund at the end of the year. My question is, if our client replenishes their unemployment fund in full in December 2020, is that fully deductible on their 2020 1120s?
5. First, we all miss you this year!!! You are awesome. We are all concerned about this PPP forgiveness right now but as I was doing some estimated tax calculation for 2020 it came to me that this PPP forgiveness may have a larger impact. Since QBI deduction is the lessor of 20% of QBI or 50% of wages, ignoring the taxable income limitation in this question, what is going to happen to this PPP forgiveness, is it now going to increase profits by reducing the wage deduction? If so, this needs to be factored in to make sure you don’t run into the 50% wage limitation causing missed QBI deduction opportunities.
6. Client has a Thrift Savings Plan. Client turned 70.5 in October 2018 but has not yet retired. Is it correct that the client is not required to take distributions until retirement and, if so will the client fall under the new rule making the age for RMD 72?
7. Client is a sole proprietor with one employee. He filed and received a PPP Loan with the 2019 Net Business Profit included in the loan request calculation. Is he required to take a draw from the PPP Loan or can he use the loan to pay the employee's salary, health insurance, rent and utilities?
8. For PPP forgiveness, if I prepay rent during the eight week period, can the prepayment be forgiven. E.g. during the eight week period May-June, I pay May and June rent, but also, July and August, can I include the July and August rent as forgiven?
9. I have an employer that has had 2 employees out on Workers Compensation during the timeframe of his PPP loan. Can we still include those employees in his FTE count or do we have to exclude them?
10. Trying to decipher the definition of "qualified wages" for the employee retention credit. The decline in gross receipts is easily measured, but the "OR operations are fully or partially suspended due to a government order" may be subject to some interpretation. Our own CPA office stayed working, and while our receipts were not down 50%, they were down, and our operations were partially suspended due to the governor's stay at home mandate. Other examples are a realtor client who couldn't show houses; a graphic artist whose clients were closed; a garage equipment installer who couldn't travel; etc. The 941 instructions offer no other guidance.
11. It appears from reviewing page two of the form the owner employee of an S Corp is capped at 2.5 months’ worth of 2019 W-2 regardless of whether they elect 8 or 24 weeks. Am I reading that correctly. Would the same be true for Schedule C individual? Example Owner employee W-2 $45000 put they typically pay 1/3 of pay or $15000 April-June would they be limited to $9375 (40K/12* 2.5) My issue is a seasonal owner employee pays himself more April to June (landscaping company) due to more hours worked.
12. For a construction company, filing 1120S, with largest expense being subcontractors, is subcontractor expense listed as labor in COGS? If yes, is this figure added to wages when calculating 199A?
13. I find these question and answer sessions very helpful. Thank you! Is the capital gain derived from the sale of goodwill, used in an active trade or business, excludable from the net investment income tax calculation?
14. I am unclear on the PPP penalties-can you give me a quick review?
15. How do I calculate FTE?
16. I am confused on the loan payback period for non-forgiven amounts of PPP loans-what are they?
17. When does the PPP Forgivenss app has to be filed?
18. DO employer paid HRA expenses count as healthcare costs?
19. Does dental and vision insurance qualify as healthcare costs?
20. I know you guys developed a software for Form 3508EZ-any chance you will make it available?
21. Are S corp shareholder retirement costs also limited by the $100,000 annual cap on pay?
22. Where will you guys be discussing PPP forgiveness?
23. When can I use the alternate covered period and do I need to?
24. My client’s bank is asking me to “attest” that all calculations in the forgiveness application are correct. Do I have to do this?