Although most COVID-19 relief programs have expired, many taxpayers are still sorting through lingering questions about their eligibility for various credits and grants. One such program, the Employee Retention Tax Credit (ERTC), has attracted particular attention in recent months.
The rules governing the ERTC are complex, and some eligible employers might not realize they qualify. Your company certainly should take advantage of tax credits for which it is eligible, and the ERTC was indeed a lifesaver for many businesses. (more…)
PPP Loan Payments May Be Due for Some Borrowers – PPP loan borrowers have ten months after their “Covered Period” ends (anywhere between 8 and 24 weeks after receiving loan proceeds) before loan payments are required. Borrowers can apply for forgiveness at any time before the loan matures but will need to start making payments if they apply after this ten-month period. For those who received a PPP loan at the beginning of the COVID pandemic, it may be close to the end of their ten-month window, and payments may be required soon. (more…)
Round 2 of the Small Business COVID-19 Relief Grant Program will begin accepting applications for one week only from February 2 at 8:00 am through February 8, 2021 at 6:00 pm
The California Small Business COVID-19 Relief Grant Program announced that it will take applications from California small businesses impacted by COVID-19 for grants of between $5,000 and $25,000. The application period begins at 6 a.m. on December 30, 2020, and continues until 11:59 p.m. on January 13, 2021. The program will award $500 million to eligible entities.
Eligible businesses are those with between $1,000 and $2.5 million in annual gross revenues based on their most recently filed tax return, and include sole proprietorships and nonprofits. (more…)
The CARES Act clearly states that a forgiven PPP Loan would not be treated as taxable income. However, it did not specify if the eligible expenses would be deductible. In April, the IRS issued Notice 2020-32 taking the position that these expenses would not be deductible. The Notice did not address how a taxpayer would report these non-deductible expenses if they were incurred in one tax year and loan forgiveness occurred in a subsequent tax year. (more…)
Recent guidance from the IRS has granted additional relief to taxpayers impacted by California wildfires and created uncertainty for the implementation of one of President Trump’s August 8th Executive Actions. (more…)
Below is a summary of the Federal COVID-19 related updates from August 2020. (more…)
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…)
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 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…)