One of the most touted portions of the CARES Act enacted last year was the suspension of monthly loan payments on existing SBA loans. Entities that had existing SBA financing were no longer required to make payments for one year.
This has saved our clients lots of money, but just because you don’t have to make your loan payments doesn’t mean that it won’t cost you.
Interestingly enough, no one seems to be writing about this. Just because your PPP Loans are non-taxable doesn’t automatically mean that the rest have the same status.
By not paying your monthly loan payments, you have an economic benefit. As such, you are required to pay income taxes on that economic benefit.
It’s not free.
Let me leave you with this.
Governor Pritzker unveiled his new budget last week. Rather than doing a 20% across the board tax increase as he had promised, he has reduced spending and proposed closing what he calls “Corporate Tax Loopholes”.
One of those tax “loopholes” is eliminating Corporate Net Operating Loss deductions that are greater than $100,000. If you lost that much money, wouldn’t you expect to be able to take a deduction for the loss? He is also planning on bringing back the Corporate Franchise Tax, the increase in registration fees for doing business inside the state.
At a time when we need to be doing everything possible to attract businesses and keep as many others inside the state, what is he doing? He’s making Illinois even less attractive to businesses.
If you were a restaurant or a concert venue that lost over $100,000 and now can’t even get a deduction, would you want to stay?
This hasn’t passed into law yet. We’ll see what happens this time.
We’re all going to get through this. Let’s 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,
Accounting Solutions Ltd.
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