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PPP Loan Part 2

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We already covered in Part 1 highlights of the PPP loan changes such as loan forgiveness issues, and another round of PPP loan funds available, also called the PPP2 loan program. In this posting we will cover other topics that were also included in this legislation.  Please note this is not a comprehensive list, and we may offer other updates at a later date.

  • Extension of unemployment benefits as a $300 per week supplement (effectively extending the prior unemployment benefits offered through March 14, 2021).
  • Increases deductible meals deduction to 100% (from 50%) for ordinary and necessary business meals that are purchased from a restaurant.
  • Simplifies PPP loan forgiveness application for loans of $150,000 or less. 
  • Eliminates the requirement that PPP loan borrowers deduct the EIDL advance amount from their PPP forgiveness amount.

We help many other individuals and businesses with tax reporting, general tax compliance and advice. If you do not feel comfortable taking care of these filings, reach out to us at [email protected].

Anthony Momany, Managing Member, Capstone CPA Group PLLC

PPP Loans- Part 1

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As changed in the recent legislation, PPP loan funds received in 2020 under the PPP program will likely be treated “from a tax standpoint, as though they were never received”. We are still awaiting technical guidance from the IRS to comply with any reporting requirements, and we believe there still may be some technical issues that will affect business tax reporting for PPP loan funds received in 2020. However, we are hopeful that this will effectively eliminate the dispute between Congress and the IRS as to whether PPP loan funds, once forgiven, should be treated as income or an impairment of an expense on your business tax return for 2020 or 2021.

This bill also may provide your business with much needed funding in the form of another round of PPP loan money available (calling this program PPP2). Under the PPP2 program your business may be eligible for a potentially forgivable loan under the following circumstances:

1.       Your business did not receive PPP loan funds last year OR

2.       Your business did already receive PPP funds AND has all the following characteristics:

a.        Have fewer than 300 employees

b.       Have used or will use the full amount of the PPP loan (per forgiveness testing)

c.       Can show a 25% gross revenue decline in any quarter comparing 2020 to 2019.

We help many other individuals and businesses with tax reporting, general tax compliance and advice. If you do not feel comfortable taking care of these filings, reach out to us at [email protected].

Anthony Momany, Managing Member, Capstone CPA Group PLLC