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.
By Deepa Bhat, CPA, Principal
In response to the widespread disruption caused by COVID-19, the Financial Accounting Standards Board (FASB) announced in their Board meeting on April 8, 2020, a proposal for delays in the following accounting standards for certain entities: (more…)
By Jeff Faust, CVA, Director of Valuation Services
ASL Business Valuation Services
There is quite a bit of uncertainty with businesses given the global coronavirus pandemic. This uncertainly also means that a company’s value has been impacted since uncertainly creates risk and increased risk lowers value. What is this doing to a business owner? What are they thinking and how are they navigating through all of this? (more…)
By Nick Sabbatini, CPA, Audit Manager
Please be aware of potential fraud schemes related to economic stimulus programs offered by the U.S. Small Business Administration (SBA): https://www.sba.gov/document/report–sba-programs-scams-fraud-alerts
Links in emails and texts. Those few words, in the context of fraud, likely lead you to think of a range of potential threats to your business. If you’ve addressed the risk appropriately, you’ve trained your employees that such communications may even appear to come from management, others within your organization, or from known vendors and customers. However, these types of attacks are likely to increase in times of crisis, when curiosity, empathy, philanthropy, and fear push people to seek new information, help others in need, and find ways to protect themselves. (more…)
The CARES Act contains several provisions to get cash directly into the hands of taxpayers who are either currently employed or not working. These sources of cash include:
While businesses are carefully watching their cash flow, The CARES Act contains several provisions to provide cash for immediate operating needs:
On April 3, 2020, the IRS has released Form 7200 to claim advance payment of tax credits discussed below.
The Families First Coronavirus Response Act (FFCRA), enacted on March 18, 2020, requires private employers with fewer than 500 employees to provide employees with paid sick leave or extended family and medical leave for specific reasons related to COVID-19.
Effective Date: April 1, 2020, and applies to leave taken between April 1, 2020 – December 31, 2020 (more…)