Below is a summary of the Federal COVID-19 related updates from August 2020. (more…)
2020 Required Minimum Distributions (RMDs) - Waived Under the CARES Act
By Angel Nevis, CPA, Senior Tax Manager; Anu Joshi, CPA, Senior Tax Manager; Chris Madrid, CPA, Tax Director, ASL Family Wealth & Individual Tax Planning Group
ACTION REQUIRED BY AUGUST 31, 2020
If you have taken required minimum distributions from a retirement account in 2020 or are planning to, don’t miss this relief provision and potential tax-saving opportunity.
For the 2020 tax year only, RMDs from retirement accounts are not required. This includes distributions from traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) plans, and profit-sharing plans. The waiver was recently expanded to include distributions from inherited IRAs, and also applies to certain taxpayers who reached RMD age in 2019. (more…)
COVID-19 Recovery - How the Employee Retention Credit Could Improve Cash Flow
As post-COVID recovery efforts gain momentum, many businesses are taking a fresh look at some federal stimulus and tax relief programs they had not previously considered. One such program, the employee retention credit contained in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, could be especially useful in helping companies bring back furloughed or laid-off employees.
In addition to helping reduce employment tax obligations, it could also help cash-strapped companies of any size improve cash flow during times of reduced revenue. (more…)
How Does the SECURE Act Affect Estate Planning?
The Setting Every Community Up for Retirement Enhancement (SECURE) Act is the biggest retirement planning law in decades. However, when all is said and done, the new law may have just as significant an impact on estate planning, especially if younger individuals are in line to inherit IRAs or qualified retirement plan accounts.
Key SECURE Act provisions
The SECURE Act includes noteworthy provisions for both individuals and businesses. Let’s focus here on a summary of the key tax law changes for individual retirement-savers. (more…)
Paycheck Protection Program Loans for Taxpayers with Self-Employment Income
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.
Business Valuation and COVID-19: What Are Business Owners Thinking?
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…)
CARES Act - Business Provisions
While businesses are carefully watching their cash flow, The CARES Act contains several provisions to provide cash for immediate operating needs:
SBA Relief Program Comparison Chart
For additional information and daily updates, see:
- The Paycheck Protection Program Flexibility Act Eases PPP Forgiveness Rules
- SBA Releases Paycheck Protection Program Loan Forgiveness Application and Limited Guidance
- SBA Releases Additional Guidance Regarding Certification of “Need” for PPP Loan
- SBA Announces Retro-Active Change to Paycheck Protection Loan Program
- Paycheck Protection Program Loans for Taxpayers with Self-Employment Income
- Paycheck Protection Program and Forgivable Loans Summary
- COVID-19 and Tax Changes
Families First Coronavirus Response Act (FFCRA)
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…)