PPP loan Forgiveness

[Brian EA]

Has anyone filed for Loan Forgiveness ?
Several of my clients are still waiting to hear from their banks
The last I heard is that the banks are waiting on congress for updates
Brian

[Lion]

The banks can take up to 60 days to submit to the SBA. The SBA can take up to 90 days to approve/fund the bank or deny. So, your clients might not hear from their banks for almost five months.

[taxmandan]

I think I have. Now that the 24 weeks is finished, my CU had me fill out a "questionaire" and submit the docs for foregiveness with it. But I've heard nothing from them about status or if there will be more paperwork later. I qualified for the EZ version of the application but why they called it a Questionaire not a forgiveness application is beyond me.

[sami]

How will the forgiveness amount be reported on Schedule C for sole prop as they have no payroll? I understand the rent expense be reduced by the amount of forgiveness but about the rest. Clients are waiting to make the next quarter estimated based on that. Not sure if the Gross receipts will be increased with the amount of forgiveness? Any answer to this will ne helpful. Thanks

[Lion]

The forgiven amount is NOT income. Schedule C proprietors have nothing to reduce; the PPP covered their profit and not their expenses. Other entities reduce their expenses by the forgiven amount -- can't deduct expenses paid with nontaxable income.

[taxmandan]

Received email from my credit union this afternoon, the SBA has forgiven the entire amount of my PPP loan. This is less than a month after I submitted the application to the CU. I am amazed at how this process worked so efficiently, my loan was approved 4 days after I applied and now a quick forgiveness, Credit Unions are the best.

[BOB W]

It appears that the loan forgiveness, when allowed, will reduce the related expenses from being deducted. If that is the case, it will increase profits. So, if the forgiveness is delayed to 2021, there will be a whole year before any tax is due, other than estimated taxes for 2021. What do you think?

[JON]

I think among preparers it has become obvious.??? Some in the Congress have said that PPP should be non-taxable income and no reduction of the related expenses. IRS has not changed their mind and stay with their May 2020 stance saying there is a reduction in expenses. Schedule C(IRS side) I think you do reduce other expenses on the C you used for the loan -salaries to employees and other qualified expenses. Obviously no reduction for your bottom line of your C.

Probably will have to wait for the next package which will probably get moved back to February where hopefully both the new package will get through Congress and they will tell us how the OLD packaged should be handle for tax purposes.

[mhcpa1964]

Most of my clients have exceeded the forgiveness threshold in payroll alone. To streamline the forgiveness application I thought about entering N/A or zeroes for the non-payroll amounts. Do you think that could come back to haunt me? It would save me and the client time by not having to produce and keep unnecessary documents.

[BOB W]

As long as gross payrolls and head count are satisfied I see no reason to provide anything else. Your question has been on my mind as well..... I don't see any down side.

[ttbtaxes]

Treasury has chimed in again with Rev. Rul 2020-27 and Rev Proc 2020-51. In general, expenses are disallowed in the year paid regardless of what year the loan is forgiven. The only exception is for loan amounts that will not be forgiven.

https://www.irs.gov/pub/irs-drop/rr-20-27.pdf

https://www.irs.gov/pub/irs-drop/rp-20-51.pdf

[BOB W]

OK... How will sec 199A be handled if Payroll expenses are reduced to the extent of loan forgiveness? Is it lost to the extent of Payroll forgiveness?

[BOB W]

One my clients in NC has had his PPP loan forgiven. He received his letter. By they way, his loan was around $260,000.

[mhcpa1964]

Bob W, I've filed a few forgiveness apps for clients. Regions Bank's portal was by far the best. It recognized the client's PR exceeded the loan. From there I was given the option to enter the non-PR data or skip the section entirely. Great portal. For the other portals I entered zeroes form non-PR.

Your 199A comment is a great question. I was just going to write the loan off to Other Income since it's a grant. I wasn't planning in treating the forgiveness as a PR reduction. So far I haven't read anything forcing us to reduce it either but time will tell.

[Anarchrist]

199A uses W2 wages. PPP doesn't come into play.