Dear Appletree Client:
Merry Christmas from the government!! It looks like Congress has agreed on a COVID Relief Bill.
We have a copy of the 5,556 page bill with lots of details, but here’s the executive summary from a small business tax perspective.
Contrary to previous guidance we were all relying on from the IRS, PPP Expenses are now deductible in full on your 2020 tax return — The monies you received are NOT taxable income and you may deduct the payroll expenses on your tax return.
The FFCRA Sick Leave provisions have been extended to March 31, 2021, whereby the employer provides 80 hours of emergency sick leave to employees. Previously, this was required through December 31, but is now optional through March 31, 2020.
Business Meals will now become 100% deductible, but must still be ordinary and necessary in your business, and must not be extravagant.
All loans over $150,000 will need full documentation submitted to the lender. Loans under $150K will have 1 page attestation.
Initial PPP Loans — $35 billion is earmarked for anyone has not yet borrowed in PPP 1.
New PPP Draw 2 – A 2nd PPP round for businesses must have a 2019 to 2020 drop in any quarter of 25% or more to be eligible based on 2.5 times monthly payroll like original (3.5 for restaurants, bars and hotels).
You can also pick any 8 or 24 week covered period to spend the money.
What Everyone Must Know?
We still have many questions, but wanted to get this out to you.
If you are interested in another PPP loan, please keep in mind that the major banks will need to be updating their websites to accommodate your applying for these loans. We recommend that you consider using a smaller bank for the loan submission once the SBA forms have been made available if you wish to expedite this process. Meanwhile, this will take time to roll out, at least a week before we start seeing some more detailed guidance from the SBA.
As always, please let us know if we may be of assistance. We anticipate that we will be available for Loan assistance applications and forgiveness applications as we were for the first round.
Please let Paul, Karen or me know if one of us can help you.