A new Stimulus Package seems like it will be passed and signed into law. None of this has actually happened yet, but Congress all of a sudden seems in a hurry to get it done so that they can go home for the Christmas break. The proposed legislation includes the following
Expenses used for forgiveness on PPP Loans will be Deductible
That’s right. You heard it. Inside the new law is a provision eliminating the deduction problem on COD or Cancellation of Debt Income. Whether or not the IRS will actually enforce this law, is another thing altogether. We’ll see.
2nd Round of PPP Loans
$284B of the package is earmarked for another round of PPP Loans. This would be either for businesses that never received one this year, or a 2nd round of loans. This time, the qualifications are much more extreme.
In order to receive the loan, you must be an eligible entity which is a Sole Proprietor, Partnership, or Corporation that can prove a 30% reduction in gross receipts from the same quarter in 2019. According to the bill, Schedule E Landlords and Schedule F Farmers do not qualify.
Further, you must have less than 300 workers. The maximum amount of the loan is $2M. Also, there must be a 90 day wait in between the loans if you already got one, and the entity cannot be in bankruptcy.
Simplified Application for Borrowers under $150K
The bill allows for a simplified, one page application on smaller loans.
Simplified Forgiveness on Loans between $150K and $2M
If this bill passes, the borrower is no longer required to submit all of the data along with the forgiveness application. You must have it and it must be retained, by supposedly you don’t have to send it in.
This is how it sits now. All of this could change by the time you read this. We’ll see if they can get anything passed.
Let me leave you with this.
I had an interest conversation with one of my newer clients who is a long term stock market investor. He asked me when the other shoe was going to drop in the economy. He’s as worried about his investments as the rest of us are.
My retirement accounts, in the middle of a pandemic, are up over 20% this year.
I recently read a piece that quoted four of the most sought after prognosticators. The average increase in the S&P 500 was 14% for next year. My problem is that I don’t see how any of this is possible in the first place.
How can our accounts be trading as high as they are in the middle of this mess? Coming out of the mess next year, I could see how things might increase, but now?
It’s like the entire economy has forgotten about certain industries like travel, restaurant, and hospitality. My oldest friend is a 747 pilot that flies cargo, from the Orient to Alaska. At least 90,000 pilots have been furloughed. That’s a staggering number. Then think about the additional flight crew members from the maintenance guys and the baggage handlers to the people working security and the in-flight stewards. That accounts for millions more in lost jobs.
Then there’s the jet’s themselves. Supposedly over 3,000 jets have been mothballed in the Nevada desert. There’s so many sitting, that they’re running out of room. That’s just the domestic airlines.
The money involved in just this one industry is staggering. Each of those jet’s is worth how much? Older 747’s near the end of their useful life sell for $40M. The total is a crazy number, and they’re sitting idle. I bet the banks still want to get paid on those notes.
We all keep wondering when the other shoe will drop in the overall economy. I certainly hope that it never does, but there’s always a reckoning. Sooner or later, we all need to pay the piper.
Either way, we’re all going to get through this. Let’s all get through it together.
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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