As our clients have come to expect, we will make every effort to provide value and assistance and we reviewed the entire 5,593-page bill over the past 24 hours to find value that may be garnered for our clients.
With such a large bill, there are hundreds of provisions. We are in the process of breaking down the package and have picked several salient points that will apply to many of our clients. You can expect more commentary and analysis from us in the coming weeks.
Key Points that will impact you:
- The bill now allows us to deduct the expenses paid for by PPP proceeds that were previously nondeductible for tax purposes. For our clients that took advantage of the PPP, they can now deduct the expenses related to forgiven PPP funds. This means that although nothing will change with cash flow in your businesses, you will now have much lower taxable income or a larger tax loss
If you are able to report a net taxable loss in your businesses for the 2020 tax year, we likely can file an Net Operating Loss Carryback to get refunds of any taxes you paid 5 years ago, and then walk any remaining unused NOL forward from 2015.
- A second round of PPP funds are to be made available for eligible businesses. For restaurants and hotels (any Business with an NAIC code beginning with 72) the amount of the forgivable loan will be 3.5X your average monthly salary. For all other eligible businesses, the loan will be 2.5X average monthly payroll.
To qualify for this round of the PPP, you will need to prove that your business lost at least 25% of revenue for any quarter in 2020 as compared to the same quarter in 2019. Special rules apply for newer businesses that did not have operations for all of 2019.
- Simplified procedures for forgiveness of PPP loans of 150k or less are provided. The new forgiveness applications are now one page or less for such loans.
- The EIDL advances of up to 10k that many of our clients received have been made both non-taxable and no longer reduce the amount of the PPP loan that can be forgiven.
- Additional funding and government guarantees are going to be made available to banks in the very near term to provide more assistance to businesses that need it. There is not a new “EIDL” loan, but other new funding mechanisms will be rolled out soon.
- Starting on 1/1/21 through the end of 2023, business meals are fully deductible from taxable income. After expiration, the applicable percentage of deductibility returns back to 50%.
- The bill provides rent assistance for eligible tenants of housing rentals, and either the tenant or the landlord are likely to be able file applications to receive otherwise unpaid rent.
- Grants, loans and tax breaks are provided for numerous types of venue operators and owners.
- Some expiring tax provisions have either been extended or made permanent, including the 7.5% floor of AGI for medical expenses and the 179D tax credit for energy efficient properties.
Stay tuned for additional analysis and comment on this developing package. We look forward to serving you in 2021 and levering our skills and the new laws to your benefit.