New Developments – May 2021
The FTB has stated that they will not be creating any new forms or certifications for taxpayers to demonstrate that they meet the 25% drop in gross receipts test for purposes of deducting expenses paid with forgiven PPP debt. They will be updating form instructions, though we do not know when to expect those updates.
The SBA has stopped accepting new PPP applications from most lenders as general funds run out. The only remaining funds available for new applications are $8 billion set aside for community financial institutions (CFIs), which typically work with businesses in underserved communities. The agency also has set aside $6 billion for PPP applications still in review status or needing more information due to error codes.
New Developments – April 2021
Gov. Newsom signed AB 80 on April 29, 2021. AB 80 generally conforms to the federal treatment of PPP loan forgiveness and EIDL grants, with one major exception:
- To deduct expenses paid with PPP loan forgiven amounts, the taxpayer must have a 25% reduction in gross receipts in any 2020 calendar quarter as compared to the comparable 2019 calendar quarter. If the taxpayer does not meet this threshold reduction, the expenses cannot be deducted on the California return.
- 2021-32: California’s partial PPP conformity bill sent to Governor
Expenses paid with 2020 PPP loans can be deducted on 2021 tax returns–The IRS announced a limited safe harbor for certain businesses that received first-round Paycheck Protection Program (PPP) loans but did not deduct any of the eligible expenses because they relied on (previously) current IRS guidance. This safe harbor is available only for taxpayers that filed their 2020 federal tax returns prior to Dec 27, 2020.
(more…)
By Nick Sabbatini, CPA, Audit Manager
By now, we are all aware of the Coronavirus pandemic and the impact it is having on our lives, including the impact on businesses and the overall economy. Companies are working remotely, where possible. Disruptions to vendor and customer bases, market value declines and day-to-day changes in the global economy are also creating broad impacts to companies’ operations.
At this point, the general impacts on operations for most companies are known through media coverage and changes in our daily lives, but most of us may not be fully aware of the impact on financial reporting. We have summarized a few financial statement considerations: (more…)
By Laura Mays, Director of HR & Employee Development
Due to the recent COVID-19 pandemic, working from home has very quickly become the new normal for a lot of us. For some, it’s convenient to skip the commute and jump right into a day’s work, for others, it may be a little uncomfortable and challenging to juggle a work-life balance. Here are a few tips to help keep you productive while working from a home office: (more…)
New Developments – 9/24/21
Cost of home testing for COVID-19 is eligible medical expense; reimbursable under FSAs, HSAs:
Renewed tax credit can help employers hire workers – the IRS reminds employers to check out a valuable tax credit available to them for hiring long-term unemployment recipients and other groups of workers facing significant barriers to employment.
California’s statewide eviction moratorium ends on Sept. 30, 2021:
Paid Family Leave Small Business Grant – For small businesses with 10 or fewer employees, the Paid Family Leave Small Business (PFLSB) program will provide grants of $500 per employee who is utilizing the Paid Family Leave program, up to a total of $4,500 per business, to help offset the costs involved with training other employees to cover the duties of individuals on leave.
(more…)
Categories: Uncategorized
New Developments – 1/14/22
PPP Update: IRS released draft instructions for the tax year 2021 Form 1120S.
- Taxpayers reporting tax-exempt income from forgiveness of a PPP loan need to include a disclosure statement with their tax return (page 35 of instructions).
- Both the tax-exempt income and related expenses should be reported as OAA. If this was not done on the 2020 tax return and the corporation had accumulated earnings and profits the AAA could become negative resulting in taxable shareholder distributions. An amended 1099—DIV may be required.
- 2021 Instructions for Form 1120-S
Families received their final advance Child Tax Credit payment in the month of December. Eligible families who did not receive advance payments can claim the Child Tax Credit on their 2021 federal tax return to receive missed payments and the other half of the credit.
(more…)
