We have been getting a lot of additional questions on the ever changing and malleable landscape of PPP Loan Forgiveness. I have been extremely hesitant to write about this. But I feel that I have a responsibility to at least introduce you to these items, before you try to do your own forgiveness paperwork, and get your head handed to you on a platter.
Additional changes and clarifications include…
1 – If you received your loan prior to June 5, 2020, elect an eight week forgiveness period, and are owner-employees or self-employed, the total eligible for forgiveness is capped at 8 weeks of 2019 compensation or $15,835 per individual.
2 – For all other borrowers, such as those electing a 24 week period, the total is capped at 2.5 months of 2019 compensation or $20,833 per individual.
a – C-Corp owners are capped at their 2019 compensation, but can include health insurance and retirement plans as additional compensation
b – S-Corp Owners can include retirement plan expenses as additional compensation but not health insurance costs. Why? Because health insurance costs are not deductible on the S-Corp return.
c – Schedule C filers are capped at their Sole Proprietor earnings. Nothing for health insurance or retirement plans can be added or forgiven.
d – General Partners in partnerships are capped at their 2019 earnings reduced by 179 deductions, unreimbursed partnership expenses and a factor of 0.9235 with no additional forgiveness for health insurance or retirement plans.
I’m sure that this makes absolutely no sense to you, so give me a minute.
This is all about income tax law. Please remember that the intention of The PPP Loan was for it to be non-taxable. As such, forgiveness was to be set along income tax guidelines. An example would be that health insurance is not deductible at the entity level on an S-Corp Return. It is deductible on your personal, but not on the 1120S. As such, it cannot be included in forgiveness on a PPP Loan.
If it isn’t deductible on your return, it can’t be allowed in forgiveness. Everything has to follow the matching principle of taxation.
I can already hear the groans. I’m sure that you are going to have questions. Please call when you have a moment.
Let me leave you with this one thought…
Phase Four of the reopening plan began in Illinois last Friday. I don’t know what you did to celebrate, but I took my family over to The Green Mill for a couple of cocktails and then down to Devon Avenue for some Indian Cuisine. These are two things that I have been craving since this thing began. But there was one sweeping and comprehensive change that could not be missed.
No one was out on that beautiful Friday night.
After months of being stuck in our homes watching reruns on cable, everyone was still home. Other than my family, there were only four other patrons at The Mill. When we went for Tandoori, we were the only ones in the restaurant. Then something pervasive actually began to set in.
This could mark the end of culture as we have defined it.
Chicago isn’t like the rest of America. When you wake up here and open the curtains, you see a large, broad shouldered, and unapologetic example of the true American Melting Pot. We are a marvelous machine, at once both warm-hearted, and cold-blooded, taking no prisoners and tolerating no malarkey. This isn’t New York where they put on airs and pretensions or LA which at its heart is fakery and charade. We are the true heart of the American Ideal.
How will our Centre of Democracy and Freedom last if no one partakes? These places will never make it. The implication hit me like a brick.
This is our generation’s war.
My Grandfather’s generation talked about The Big One, WWII, and the changes that came as a result. My Father’s Generation still talks about The Vietnam Years. This coming November 15th will mark my thirtieth year as an entrepreneur. The Gulf War and it’s attendant recessions and depressions never even came close to any of this.
We now fight an enemy that is invisible, deadly, and omnipresent. Years from now, when we bounce our Great-Grandchildren on our knees, will we talk about The D-Day Invasion or The Tet Offensive?
Or will we tell our descendants that even after we were allowed to leave our homes and enjoy the subtle perfection of our great metropolis, that we were still so afraid that we stayed home? Is that truly the legacy of our generation? I certainly hope not.
But whatever the future holds, know that we will all get through this. Know that we will get through this together.
Accounting Solutions Ltd. stands ready to complete its mission and purpose of protecting you, your family, and your business. If there is anything that you need, anything at all, don’t hesitate to contact us. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
www.AccountingSolutionsLtd.com
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