Talking with TaxSpeaker: Video 112
1. Client is a sole proprietor and decided to apply for PPP loan. Received proceeds 8/7/20. There aren’t 24 weeks left in 2020; however, the “salary” or earnings from 2019 were $189000. How to calculate forgiveness in that case?
2. If a CPA sells his practice or a lawyer sells his practice in 2020 (sale not yet closed) having received and EIDL Grant and a PPP Loan, should the closing of the sale take place after the Application for PPP Loan Forgiveness is filed with the bank and approved by the SBA?
3. If you get PPP and an employee qualifies for Sick or FMLA can you apply for the Medicare credit or does it need to be separated?
4. I have MANY clients who have notices from the IRS requesting identity verification for returns filed July 15. When I go online with the client, I'm told unable to verify and please call. When the client tries to call, after LONG wait times, they are disconnected. Anyone else? What do I do?
5. Has there been any further guidance on the third criteria for qualifying to us the EZ forgiveness application regarding what constitutes the inability to operate the business “due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19”? Seems like all businesses have been effected as all have instated cleaning and sanitizing policies, mask wearing and social distance requirements.
6. I have a client that would like to participate in a State agricultural land preservation program. The client would receive payment in exchange for an easement that forever restricts development on the entire parcel of real property. Does the payment first reduce the tax basis of the effected property? And, if the payment is less than the tax basis, then there is no taxable income, correct? If the payment does reduce the tax basis to zero, then the excess payment is taxable as a capital gain, correct?
7. A corporation has a 2019 NOL. They are a small company, and as such, no longer subject to AMT. However, the year, to which we are carrying back the loss, they were subject to AMT, and paid AMT. How do you suggest we compute the AMT NOL carryback amount? Should we use same methodology as if they were still subject to same?
8. I know that you do not meet with clients during tax season. However, our firm is one that conducts interviews with our tax clients for individual tax preparation – that process did change to all drop off or mail in for the last few months of the 2019 tax filing year. Just asking if you have had discussion with other accounting firms as to how to prepare for the next filing season?
9. Client has several trades in 2019 related to securities SLV and GLD. I was thinking that the tax treatment of gains and losses in GLD and SLV shares would be similar to that of other ETFs. I now came to know, that isn’t the case, because GLD and SLV is structured as a grantor trust, not a mutual fund or shares. A grantor trust is ignored for tax purposes so that the investor is treated as owning a pro-rata share of the underlying holdings, not the entity. If GLD and SLV were shares or mutual fund, it would be taxed “normally,” but because it is a grantor trust, its long-term gains are taxed as a collectibles gain — at the 28% rate. Am I on the right track of understanding? Is that correct that "Wash Sales" rules do not apply to these transactions?
10. Now to the question. I received an email from an S corporation client. The S corporation is 100% owned by a single shareholder. The corporation is a real estate agency. The email was actually from the corporation’s business manager on behalf of her and the shareholder. I have cut and pasted the client’s email verbatim except for changing the names. “Since 2018 the Shareholder and I each get a salary and then we split the remaining profit 50/50. However, we do not take all the profit because we need to keep a reserve to start each new year. I'm trying to keep track of it because we also want to split the tax liability. So if the Shareholder has to pay taxes on the full profit, half of the tax should be deducted from my portion but of course if I ever get to actually collect part of the reserve profit, I would have to pay taxes on it personally so how should we do this. Also the Shareholder gets reimbursed for healthcare expenses, which I don't have so that bumps his split higher than mine. We're not being super strict about it but need some input on how to best handle it. For example: We each get $60,000 salary per year. Let's say there is $50,000 profit left after expenses and we want to keep $30,000 in reserve and pay $10,000 to both of us. That leaves $30,000 that he has to pay taxes on. So if I were to get my portion of the reserve at a later date then I would have to pay taxes again.... Do you know of a smarter way... I appreciate your help.” My additional comments. The Shareholder is willing to split the profits because the business manager is indeed doing half of the work, but he does not want to add a second shareholder.
11. Question about Trump’s recent executive orders, Specifically the order that has to do with payroll taxes. How exactly does that affect me as an employer? Do I still withhold this money from employee paychecks?