Faw Casson

Accounting and Accountability: Episode 5

November 6, 2020

Tammy: I want to give our listeners a quick PPP update. I know guys its like we are still talking about PPP. Some of your institutions do not have a portal available yet to log on to get forgiveness that’s ok and I realize there’s a lot of anxiety about it some of you just want get it done.  I did attend though a seminar with our peers last week and they had reached out to IRS Chief council now nothing has been issued in a memorandum even, nothing official, not official not in writing but the fact that you got it in 2020, that’s the year that’s reflected on your tax return.  Right now the way it stands, now we need congressional approval is that you cannot take the deduction for basically what you used the PPP funds for, which makes it taxable in a way. I mean we don’t like to say it is because this doesn’t add to your income but you know effectively its taxable.  So obviously Faw Casson is already on it.  I know you (Brian) and a lot of the other partners and managers here have already done a lot of tax planning, we are keeping our clients well informed about it because also the IRS said the year it’s incurred regardless of the forgiveness, well I know a lot of you said well I’ll just wait until next year and it will be next years problem, maybe not.  Now saying that the positive side of it that this does have bipartisan support and the professionals do believe that Congress will vote, but the issue is we don’t know when right now they are a little distracted.
Brian: You know I’m getting a lot of questions about it.  If I wait until next year obviously what Tammy just said if Chief council is saying nope you got to show it on the year 2020 and we at Faw Casson is what called a G400 firm so we are one of the top 400 firms under the AICPA umbrella in the country and I did a call last week and the head of the AICPA believes they might pass something in January, they think there is going to be bill that says it can be deductible as Tammy mentioned so we’ll see, we’ll see don’t count on it, but lets see.
Tammy: This is crucial before your January 15th estimate because technically you should be trueing it up then, so lets hope they do vote otherwise we’ll just deal with it.  That’s our job right now just to keep everybody well informed.
Brian: That’s a good Segway Tammy to tax planning. I mean it is November 2nd and so we are rapidly approaching the end of the year so most of you are probably calendar year ends and so we need to start doing some tax planning and here at Faw Casson we are pretty much doing it all year round but it’s crucial to know where you are, especially if this PPP money is going to be essentially taxable to you so we want to run some scenarios for you to figure out if with PPP or without PPP what does that look like to you.  What can we do for you at the end of the year to reduce income, I always tell people taxes is timing so to reduce taxes nine times out of ten you have to spend money.  So if your business is up I know it’s been Covid I know some of you are down but if its PPP money throws a little loop for ya and shows some more income and you weren’t ready for it.  So tax planning is two things: One to see if we can reduce your taxes before the end of the year.  Two, to get you ready for April 15th, so you may not be able to spend any money to reduce your income but at least you can be prepared.  Before the end of the year. So give us a call let’s talk about tax planning, let’s get it done and get you prepared and do the best we can to mitigate tax.
One other thing I did want to touch on Tammy before we get into your intriguing wonderful story.  We’ve talked about this in the past the Delaware Relief Grant, so round three opened today (November 6th). Now they’ve changed the parameters a little bit I think the State hasn’t spent as money as they thought so they are trying to eat up some more money, so you no longer need to demonstrate a revenue decline of at least 7 ½ % so the original was if you looked at your 2020 return vs your 2019 you had to show a 7 ½ % reduction or you had to pay it back now you just have to show a greater than 0. So as long as your gross income is reduced by a $1.00 your good.
Tammy:  So basically a break even of you can’t have increased gross revenue at all.
Brian: So also they are allowing this now for folks who got a PPP loan of a million dollars or more originally if you had that you were not allowed to get this grant relief so that’s now there also the disproportionate impacted businesses like restaurants, childcare, personal services your now getting an additional 15% bonus allocation so an additional 15% amount over and above what you’ve already been approved for or if you haven’t been approved your going to get an additional 15%.  So that’s kind of nice, so if you’ve already been approved it’s in their system and you had to have a NAICS Code, that’s a specific code that follows one of these industries, if you had that you will get an additional 15% on that loan. So that’s kind of nice.
So this third round is started today and we’ll see what happens but we will keep you posted on any developments if they’ve changed.
Tammy: That’s great, I mean that good for any Delaware based businesses, you still have to be greater than 51% Delaware business located in Delaware essentially.

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