New COVID – 19 Relief Bill Now Signed into Law by the President
Includes New PPP Funding for Previous PPP Recipients that Qualify New Simplified PPP Forgiveness Application for up to $150K Loans After much discussion regarding various elements of the bill (including the dollar amount of stimulus payments and various funding initiatives mainly in the omnibus spending portion of the bill) President Trump did eventually sign the […]
New Legislation Passes Both Senate and House
Expected to be Signed into Law this Week New PPP funds and Deductibility of Covered Expenses Provisions This week the US House and Senate passed a roughly $900 billion COVID-19 relief bill as a part of The Consolidated Appropriations Act, 2021 which effectively funds the federal government through its fiscal year end September 2021. It […]
Paycheck Protection Program (PPP) Year End Updates
IRS Issues Guidance Tax Treatment of PPP Covered Expenses
New Potential Legislation Could Be Imminent By Weeks End
Tax implications of working from home and collecting unemployment
COVID-19 has resulted in many changes in our lives, and some of them have tax implications. For example, many employers have required employees to work from home. Unfortunately, employee business expense deductions (including expenses to maintain a home office) are disallowed from 2018 through 2025. However, if you’re self-employed and work from a home office, you can be eligible to claim home office deductions for your related expenses if you satisfy the strict rules. Another tax-related situation involves people who are laid off and collecting unemployment benefits. Be aware that these benefits are taxable and must be reported on federal income tax returns for the tax year received.
Weighing the risks vs. rewards of a mezzanine loan
The economic impact of the COVID-19 pandemic has hurt many companies but also opened opportunities for others to expand or pivot into more profitable areas. If your business needs working capital to grow, rather than simply survive, consider a mezzanine loan. These work by layering a junior loan on top of a senior (or primary) loan, combining aspects of senior secured debt from a bank and equity-based financing from direct investors. The advantages: a relatively quick approval process and access to working capital that you may be unable to obtain elsewhere. Drawbacks include high interest rates and potential loss of ownership share if delinquency or default occurs. Contact us for more info.
CARES Act made changes to excess business losses
The CARES Act made changes to excess business losses that affect those who hold an interest in a business (or may do so in the future). This includes changes that are retroactive and there may be opportunities to file amended tax returns. The CARES Act made several retroactive corrections to the excess business loss rules as they were originally stated in the 2017 Tax Cuts and Jobs Act. Most importantly, the law clarified that deductions, gross income or gain attributable to employment aren’t taken into account in calculating an excess business loss. This means that excess business losses can’t shelter either net taxable investment income or net taxable employment income.
The President’s action to defer payroll taxes: What does it mean for your business?
On August 8, President Trump signed four executive actions, including a Presidential Memorandum to defer the employee’s portion of Social Security taxes for some people. These actions were taken in an effort to offer more relief due to the COVID-19 pandemic. The action only defers the taxes, which means they’ll have to be paid in the future. […]
The possible tax consequences of PPP loans
If your business got a Paycheck Protection Program (PPP) loan taken out due to the COVID-19 crisis, there are potential tax implications. The PPP allows eligible businesses to receive loans that will be forgiven if they spend the proceeds on certain items within a certain period of time. In general, the reduction or cancellation of non-PPP debt results in cancellation of debt (COD) income to the debtor. However, forgiveness of PPP debt is excluded from gross income. The IRS has stated that expenses paid with PPP proceeds can’t be deducted, because the loans are forgiven without having taxable COD income and are tax-exempt income. Deducting the expenses would result in a double tax benefit.
Strengthen your supply chain with constant risk awareness
Business owners are no strangers to supply-chain worries; the pandemic has only complicated matters. One commonly known threat is concentration, when a business relies on a customer or supplier for 10% or more of its revenue or materials, or on several customers or suppliers located in the same geographic area. Check regularly into which suppliers are available to serve you and whether new ones have emerged that might allow you to mitigate concentration. Keep a close eye on COVID-19 severity, weather conditions, tax rates, regulatory changes and geopolitical uncertainty in areas where your suppliers operate. Contact us for help making cost-effective improvements to your supply chain.
Reopening concepts: What business owners should consider
“Reopening” a business, even if it was never completely closed, involves grappling with a variety of tricky strategic planning concepts. First you must decide when it’s safe to reopen, or further reopen. This decision should be based on scientific data and trusted guidance from all levels of government (including local). You also need to carefully consider and implement a policy regarding testing on-site employees for COVID-19. Involve your attorney in this effort. Beyond testing, there’s the matter of working safely. Re-evaluate the layout and functionality of your facilities, as well as the need for more protective equipment and upgraded technology. Contact us for help.
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