IRS Issues PPP Deductibility Guidance – Thanks Captain Obvious

The IRS released guidance on the deductibility of PPP loan forgivable expenses.  Here are the links to the Revenue Ruling and Revenue Procedure.  Essentially, if you are eligible and the loan is not yet forgiven or you have not applied for forgiveness, then you have to wait until the decision on the forgiveness is received to apply the deduction (i.e., no forgiveness in 2020, no expense deduction in 2020).  That would be nice if it was the middle of the year and you still had time.  However, we are a little more than a month from year end and many banks and borrowers are still slow with submitting and processing forgiveness applications, for good reason.

Moreover, there is little to no chance that Congress will enact another round of disaster relief legislation any time soon, which was supposed to have some type of fix for this very scenario.  Good luck with your 2020 tax filings if you have not received PPP forgiveness yet.  Please make sure you talk with your trusted advisor (accountant, attorney or whomever you use to do your books and taxes).  However, in the interim, I can’t help but think that Captain Obvious was part of the decision making process on this latest IRS guidance.

A few other items we thought were of interest:  

 

Please see all of our prior updates at the this link or if you would like to be added to our email list, please click here.  

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com) or anyone in our office with questions or comments.  

MPL General Counsel Corner – If you stare at it long enough, you will see a sailboat or maybe get an interest free loan.

Like most relief programs to date, there is always more questions than answers once an update is released.  Last week, the Department of Treasury provided an update on PPP Forgiveness as it relates to Owners Compensation and Certain Non-Payroll Costs.    While helpful, especially if you own 5% or less of the company, most businesses that I have talked to are taking a wait and see approach for the next round of stimulus.  It is expected that PPP loans that are less than $150k will be automatically forgiven.  I presume November 3rd (hopefully) will have something to do with that decision and many others.

This week, the Department of Treasury and the IRS issued guidance on the payroll tax deferral.   While I am no expert in these areas, I know enough to be dangerous.  However, I think the experts are better equipped to provide insight.  Check out what I thought were some of the better insights on this recent update:  However, I thought the following updates provided some great insights.

Clearly, there is more confusion on these programs than clarity.  It reminds me of an oft-quoted scene in Mallrats – If you stare at it long enough, you will see a sailboat….or maybe get an interest free loan.

A few other items we thought were of interest:   

·       NFIB Webinar (9/2/2020 @ 12pm) – Ready for PPP Loan Forgiveness?  

·       Bankruptcy Updates from Rob Bovarnick (rbovarnick@rbovarnick.com)– It’s an unfortunate reality, but the following “Behind the Curtain – Chapter 11 From Inside” updates published at Forbes.com are very helpful (note that Chapter 5 and 6 are additions from my last update).

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here.  

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com) or anyone in our office with questions or comments.  

MPL General Counsel Corner – Taking the Complex and Making It Simple (Sort of)

The SBA released updated guidance and a new forgiveness application and instructions late last week for PPP loans of less than $50k.  Essentially, if your PPP loan falls into this amount, you can now certify that you have met the FTE and Salary requirements, versus the prior requirement to show your calculations.  You still provide the back-up documentation to your lender and the SBA can still perform an audit.  So, make sure you keep good records.  Perhaps this is a test run to see if it lessens the forgiveness review burden.  Time will tell.

Albert Einstein said it best: “The definition of genius is taking the complex and making it simple.”

 A few other items we thought were of interest:  

 

Please see all of our prior updates at the this link or if you would like to be added to our email list, please click here.  

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com) or anyone in our office with questions or comments.