Earlier this month, the IRS released Notice 2021-49 and Revenue Procedure 2021-33, to provide additional guidance for employers claiming the Employee Retention Credit (ERC) in 2020 or 2021. This guidance provided answers to several unresolved issues including: (more…)
California Enacts a Pass-Through Entity Tax
Good News for Business Owners – California Assembly Bill 150
By Rob Trammell, Principal
For those of us living in California, or other high tax states, there was a nasty section of the Tax Cuts and Jobs Act (TCJA) that has been causing some pain since 2018. That was the $10,000 limitation on the amount of state and local taxes that could be deducted for federal purposes. Even though your state income and property taxes could well exceed that amount, the maximum deduction on your federal return was limited to $10,000. (more…)
PPP Update for Borrowers of $150,000 or Less
The SBA announced that PPP borrowers of $150,000 or less (for either first draw or second draw loans) have access to a simplified loan forgiveness process:
- SBA Loan Forgiveness Portal – Borrowers are able to submit their loan forgiveness application directly to the SBA through a streamlined portal as of August 4, 2021, rather than to their lender/bank.
- The lender/bank must opt-in to participate in this program. Therefore, check with your lender to see if you can utilize the SBA Portal. Currently, nearly 900 banks representing over 2 million borrowers have agreed to participate, however, it is expected that most large financial institutions will not participate and continue to use their proprietary portals. The SBA has provided a list of participating lenders.
- The Portal will allow borrowers to complete Form 3508S which was recently revised.
- The SBA set up a PPP customer service team to answer questions and directly assist borrowers with their forgiveness applications. The customer service team is available by calling (877) 552-2692, Monday – Friday, 5:00 AM – 5:00 PM PDT.
Section 1202 Offers Attractive Tax Treatment for Capital Gains on Qualified Small Business Stock
By Jyothi Chillara, CPA, Principal
Section 1202 of the Internal Revenue Code is gaining greater interest from shareholders and investors in start-ups and small businesses. It offers favorable tax treatment for capital gains to those holding qualified small business stock (QSBS). A qualified small business (QSB) is an active C corporation with assets of less than $50 million at the point of or immediately after the issuance of stock.
According to IRC Section 1202, QSBS holders may have gains of 50 percent to 100 percent excluded from their tax obligations, depending on the date the stock was acquired. The exclusion is generally limited to either $10 million or 10 times the taxpayer’s basis in the stock, whichever is greater. (more…)