I’m getting some questions that I haven’t explored yet, so I did some research. Please don’t misconstrue any of this as legal advice. I’m not an attorney, I don’t even play one on TV. If any of this even begins to sound like legal advice, please consult the lawyer of your choice.
I’m thinking about filing a bankruptcy. How will it affect my PPP Loan?
Let’s realize that this is all new to the Bankruptcy Courts, so in certain instances, we don’t know. It is an unsecured loan. As such, the government would normally be in an unsecured position.
But what if you didn’t use the loan properly? What if you didn’t have an economic difficulty when you applied for the loan, negating the need? What if there is fraud involved? How would any of this affect a bankruptcy proceeding?
There haven’t been enough cases going through the courts yet to be able to answer these questions. There are arguments on both sides, so we’ll just have to wait and see.
There are certainly substantial issues when it comes to fraud. Be careful. Consult the attorney of your choice before making any decisions. Many entrepreneurs are thinking in this direction given the fact that the government has shut many businesses down again. Be careful. This isn’t advice that I can provide.
I received the PPP Loan and didn’t use it properly. If I file a bankruptcy, will I have to pay taxes on that type of forgiveness?
This is confusing, so let me take you through it. We are now talking about the cancellation of debt rules.
If the client had received the PPP Loan and used it properly, we would put in Form 3508 and have it forgiven. At that point, their would be no cancellation of debt income, with no 1099B or 1099C being issued.
But that is not the case here. If the loan is forgiven in a bankruptcy proceeding, then a 1099C would probably be issued forcing the client to pay tax on the debt. The concept in tax law is that because you no longer have to repay the debt, you have an economic benefit which is then taxable.
But wait, there’s more.
Just because you receive a 1099B or 1099C, does not automatically mean that you have to pay an income tax. If it can be proven that you were insolvent at the time of issuance, then you would not be forced to pay tax on the Cancellation of Debt Income.
Let me leave you with this.
Now that the PPP Loan money has run out and the government is again deadlocked, many entrepreneurs are considering their options.
Now isn’t the time to give up. It’s time to dig a hole, shoulder a weapon, and get it done. I was thinking about this Monday morning, so let me describe my day.
I woke up at 4:30 am, because I needed to meet the outfitter at half past five. I followed him in his pickup. I ‘ve never understood how these guys out in the country can drive so fast on country roads in the dark. Being a Chicagoan, I’m just not used to the hills.
We get to our destination which is a bean field with one side being a forest. The other is a small creek. Sunrise is a little after seven in the morning, so I grab my 30-06, a few cartridges, and climb the ladder to the tree stand. It’s twenty-eight degrees, I’m twenty feet up in a tree, and the wind is howling out of the north at thirty miles an hour. This redefines the concept of cold.
Welcome to deer hunting in Central Indiana.
An hour goes by, and I haven’t seen anything. Three more go by. I’m so cold, that I begin asking myself questions like, Did your Mother actually raise a child stupid enough to do this? By eleven, the only thing I’ve seen is a squirrel. Rugged doesn’t begin to describe this, so I get back in my car, find a fireplace, and a warm bowl of chili.
A couple of hours later I’m crazy enough to want to do this again. This time I’m in a blind that’s in the middle of a corn field. The blind at least stops the wind, so it’s a little better.
In the middle of this, I thought about our jobs as entrepreneurs. So many people are willing to cut and run when they face a little hardship. All of a sudden the government isn’t passing out free money, and they only thing many want to do is give up.
Would you grow a pair already?
Improvise, overcome, adapt. No one ever said it was an easy job, because it’s an adventure. You’re the lead dog on a sled team. You should be glad of that fact. If you weren’t the lead dog, the scenery would never change.
What the government did was unprecedented. A Republican President pushed through what could only be labeled as a socialist welfare program for businesses. If you had asked me five short years ago whether or not this was even possible, I would have laughed in your face.
Now that it’s over, what are we supposed to do? Give up? Hell no. We’re Americans. We don’t lose our wars. Shoulder your weapon and get done.
I’m not going to tell you exactly how my hunt ended, but I will tell you that I made a 207 yard shot in the cold when it was almost dark. Before any of you start your nonsense, realize that the steak you just ate came from a cow.
Think about what I did on Monday. Realize that the next time you’re in someone’s home and they offer you some venison, be at least thankful. I’ll bet you dimes to donuts, he went through some craziness to put that meat on the table. Also realize the type of guy you would have to be, to be able to do that. It’s not nothing.
If you’re in a fight, that isn’t just the type of guy you want next to you in a foxhole. That’s the guy you need.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. If there is anything you need, whether you are a current client or not, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
www.AccountingSolutionsLtd.com
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