Talking with TaxSpeaker Video 108
1. What are your thoughts about the possible Supreme Court ruling about the constitutionality of the Affordable Care Act and amending 3 years of tax returns for those affected?
2. FTEs – If the company used the ACA definition for FTE (30 hours per week) when originally filing for the PPP loan but now must use the 40 hour per week SBA definition for FTE for forgiveness, can the FTE calculation be amended/adjusted?
3. Do I understand the new PPP guidelines correctly? The extension from 8 weeks to 24 weeks: does that allow for extra payroll over those additional 16 weeks to be counted in addition to the payroll paid/incurred in the first 8 weeks? Same for the other 40% items?
4. If a business does not apply for PPP forgiveness until the end of 2020, is it possible to push the non-deductible expense portion of the loan forgiveness into 2021? In that case, the loan forgiveness will not actually occur until 2021. You mentioned in question 12 on 6/16 that, according to AICPA guidance, the PPP loan would not be reduced until both the bank & the SBA have signed off. I just wonder if makes sense to wait until year end before filing the forgiveness application to push the tax on those non-deductible expenses into 2021 instead of 2020.
5. I just prepared 2019 tax return for taxpayer that is age 75. He had taken his RMD in prior years, but missed taking the distribution in 2018. He realized this early in 2019 and took RMD for both 2018 and 2019 in the tax year 2019. I should file form 5329 for 2018 to request abatement of penalty – which I assume would be mailed in. Do you suggest mailing the 2018 form? Not sure if the stock pile of paper forms at the IRS will ever get processed!!
6. I have been hearing from multiple sources, including tax speaker, that if you have a reduction in the number of FTEs during the covered period as compared to the reference period, the reduction is applied to the loan amount. However, when I run the calculations on the PPP Loan Forgiveness Application, the reduction is applied to the total amount of Payroll and Nonpayroll costs (not the loan amount). In this case, if the loan amount is $100k, the total costs are $200k and the FTE reduction quotient is 80%, the Modified total is $160k which is higher than the loan amount, therefore the loan amount is the smaller of the two and the amount entered on line 11 for the Forgiveness Amount. Do you agree with this assessment?
7. I have a client that lost an employee in November. Only a subcontractor could be found to be a replacement. Do subcontractors count in totals for FTE?
8. 2018 Partnership return section 179. Limited Partner could not benefit from the deduction. Is it now possible for the preparer of the partnership return to amend 2018 to eliminate/revoke 179 and elect bonus instead? Preparer tells me he is extending 2019 1065 while he researches the issue.
9. Taxpayer has about $300,000 in inherited IRAs and a decent income year for 2019 – self-employed in a consulting business, large royalty/capital gain income also, income is down in consulting. What if: If able to do a $100,000 Covid distribution, opt to pay over three years, donates the $100,000 to a struggling 501c3 charity because of Covid. $33,000 of income current year from distribution to be taxed, $100,000 of contribution that can be used in 2019 to offset remaining AGI past the $33,000 income pickup. Aware that remainder is coming the next two years but expects those years to be smaller income levels.
10. I just spoke with my brother-in-law this morning (executor of my mother's estate who passed away 4/12-19), and he told me that a stimulus check was directly deposited into her bank account, probably the estate account. He wants to know how to return the funds since my mother was not alive to receive the funds. He got the letter from the white house addressed to my mother with "dec'd" after her name. He doesn't want any problems and wants to return the funds ASAP. Can you provide any guidance on this? Many thanks for any information you can provide!
11. 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?
12. I try to help surviving spouses decide if they should file a 706 just to elect portability. If the surviving spouse has a lot of assets or is younger, it seems like a good idea to file for it. However, when dealing with a surviving spouse who is 80 and has only $800,000 of assets, would you advise that they file the 706 for portability? The bulk of the decision making is based upon who you think will be in the White House in future years and how old you think your surviving spouse client will be when passing. However, do you have a rule of thumb you use to decide if a surviving spouse should be filing the 706 for portability? Also, do you ask the client to document it if they decide not to file the 706 (because it’s not them that will sue you, it will be their kids who get to see it all in hind-sight!)