Small Biz Support 2020

[::: :::]

thanks for the sensible thoughts on this, all

[Flyoverland Captive]

We have two loan apps in, approved at the bank, just waiting on funding, but our bank can’t log into the system after 4 solid days of trying. If we don’t get this, we’re looking at 80% pay cuts for 3 people. Meanwhile, a company I do books for got their PPP money, which they absolutely do not need. They’re raking it in; they’re a funeral home company, they make bank no matter what the economy is doing. The owner is so cavalier about it that he’s not claiming the claimable portion of his own income (over $100k) because it’s “not worth the trouble.”

What a clusterfuck this whole program is.

[Bunion 2020]

Yeah, there is that. I heard Senator King today discussing/explaining the problems with UIC benefits. He kept saying the program is funded and working well yet he doesn't have a clue that if you cannot get into an electronic system because it is totally overloaded with people trying to log in, it is nigh well fucking useless.

[alias_rice]

Etran has been smooth as butter since Tuesday night. If your bank is still using that as an excuse look elsewhere. We have approved almost 300 apps and were 100% caught up yesterday. Docs and fundings are all happening this week. We can take more but have only seen 3 requests today. If you are a Utah mag and are still waiting, let me know.

[Flyoverland Captive]

Thanks Rice; our companies are in MN (I work remote). I’ll talk to the owner tomorrow and make a plan.

[Cono Este]

Wish I lived in Utah.

Still waiting on sba loan # and promissory note.

Hats off to all of you that go to work with numb skulls around you all day. I’d put myself out of misery with some inappropriate jokes.




Sent from my iPhone using TGR Forums

[Core Shot]

Wish I lived in Utah.

Still waiting on sbs loan # and promissory note.




Sent from my iPhone using TGR Forums

I feel you’re angst. Even after I docusigned, I still was nervous until the money was in the account.

But take some comfort in the fact that you can sue your bank if they say you are approved but then they fucked up. Not much comfort, I hate litigation.

Deep breaths. It will happen.

[Flyoverland Captive]

Ok, this was announced today:

https://thehill.com/policy/finance/d...ualify-for-tax

Which led me to some simple napkin math. What am I missing here?


Scenario 1: Billy Bob Businessman has $10k in the bank to start 2020. He earns $50k in profit; his only expense is $50k in gross payroll (we'll ignore 940, FUTA, SUTA< etc for simplicity), leaving him with $0 profit, and $10k in the bank at the end of 2020. Simple; zero profit, zero taxes, $10k in the bank.


Scenario 2: Billy has $10k in the bank to start 2020. He earns $50k in profit, and has $50k in payroll expenses. He gets a PPP loan or $10k to cover two months of payroll; he now has $20k in the bank after depositing the PPP loan, and paying payroll. Since he can't deduct the PPP $10k from profit, he is left with $40k deductible payroll, and since the $10k forgiven loan becomes profit (it converts to a grant, which is treated as profit), his profit is now $60k. This means his gross profit is $60k, and deductible payroll is $40k, leaving a profit of $20k. He has his original $10k in the bank, plus the PPP loan of $10k, for a balance of $20k. But since he has a profit, he owes taxes. Let's say a corporate rate of 40% (yeah, lots of variables here, but hear me out). That means taxes of $20k profit X .4 = $8k. He pays his taxes, leaving $12k in the bank.

Scenario 1 and scenario 2 result in a difference of only $2k. Doesn't seem worth it for all the hassle. Where does my math go wrong? Or is this really just a wash?

[GoldMember]

Yeah, you're missing something in this but I need to get my head around it a bit for it to be more clear. What strikes me out of the gate is that whatever time you're paying your employees for is also being paid by your customer. For us, we have crews doing work intermittently in 40 hours. That work is being billed to the customer but is also being reimbursed by PPP. So, we're being paid twice for those hours or, looking at it differently, being paid for labor we're getting for free. The free portion would be taxed so it's not a full 100% net reimbursement but it's the non-taxed portion of the labor cost that we keep in profit on top of the charged for labor. Also, the overhead expenses for the two months that are forgiveable are partially paid by the customer who we're charging for the work.

[Flyoverland Captive]

I assume my math goes off the rails at some point, but I can’t see where.

The crux is that the forgivable loan is treated as profit (beyond what your customers are paying) and the PPP-covered payroll is not deductible (increasing your taxable income even further) which seem to negate any benefit of the whole program.

[Flyoverland Captive]

Let me put it another way, in hypotheticals.

1. My fiscal year is 5/1/20 through 6/30/20. Over that period, I gross $250k and spend $100k on payroll, leaving a net profit of $150K in taxable income. $150k X .4 (assuming the 40% rate) = $60k in taxes, leaving $90k in profit.

2. With the PPP, I make the same gross of $250k, and pay the same payroll of $100k. PPP pays me $100k for my payroll; this is converted to a grant (profit), meaning I gross $350k. But by taking the PPP money, I can't deduct the PPP covered payroll ($100k), meaning I have no deductions, and my taxable income is $350k. So $350k X .4 = $140k in taxes, leaving $210k in profit. And while I can't deduct payroll, I still spent it, meaning my profit of $210k is reduced by the payroll amount of $100k, leaving $110k leftover.

So the two scenarios are 1. Non-PPP = $90k profit, vs. 2. PPP = $110k in profit. $20K is a nice difference, to be sure, but these are very rough calculations, and the actual difference might be very slight.

In the real word, does the hassle make sense?

[Crusty]

Don't include the PPP proceeds in gross income. Someone else is paying your bills, the benefit is ($1 - marginal tax rate) X qualified costs.

[Flyoverland Captive]

The PPP forgivable loan amount gets converted from a loan to a grant, which is considered income, so it has to impact gross income.

[Crusty]

Where are you seeing that? It's counter to SBA, IRS and AICPA.

[Flyoverland Captive]

Digging...

[Flyoverland Captive]

One source: see #3.

https://www.salesforce.com/blog/2020...-ppp-fund.html

Just one site, but...

I’ve seen the grant thing mentioned in many places, and my understanding of grants is they are treated as income. I may be wrong, but I don’t think so.

[Flyoverland Captive]

More here:

https://www.google.com/amp/s/amp.usa...amp/2973483001

And here:

https://smartasset.com/financial-adv...gram-ppp-loans

[Core Shot]

One source: see #3.

https://www.salesforce.com/blog/2020...-ppp-fund.html

Just one site, but...

I’ve seen the grant thing mentioned in many places, and my understanding of grants is they are treated as income. I may be wrong, but I don’t think so.

Rather than a grant, it technically becomes “forgiveness of indebtedness income”
That’s been a thing in tax lingo for a long time.

I need to find the actual irs guidance to understand what they want us to do.
That article says the paid expenses become non-deductible.
An easier way is to say the loan forgiveness becomes “other income”
Same result.

This is an interesting twist in the story.

[Core Shot]

I’ll probably get my IP address traced and audited up the ass, but
FUCK THE IRS

https://www.irs.gov/pub/irs-drop/n-20-32.pdf
There’s your actual rule.

Specifically, this notice clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281, 286-93 (March 27, 2020) and the income associated with the forgiveness is excluded from gross income for purposes of the Code pursuant to section 1106(i) of the CARES Act.

Fuck them.
The act says it’s not forgiveness of indebtedness income.
Then the irs jams the penalty into the expense column instead of the income column of the ledger.

Completely opposite of the clear intent language of the cares act. Fuck.

“ Neither section 1106(i) of the CARES Act nor any other provision of the CARES Act addresses whether deductions otherwise allowable under the Code for payments of eligible section 1106 expenses by a recipient of a covered loan are allowed if the covered loan is subsequently forgiven under section 1106(b) of the CARES Act as a result of the payment of those expenses. ”

Then the irs legal cum guzzlers proceed to cite a bunch of irrelevant case law involving private charitable and public grants and other stupid shit to justify their money grab.

The fucking cares act says it’s not income, it’s a forgiven debt, by us statute. It’s not a grant. Fuck you you fucking scum. Kill yourselves, as Bill Hicks would say. You have no purpose and no soul. Fuck.

[Cono Este]

If you haven’t lost revenue, or you don’t end up losing it in a specific timeframe, I’d expect you have to pay it back.

I haven’t sold any insurance this month, so I lost out on first yr commissions which is 12 months paid upfront ( I use that as my salary), but my residuals from my book still come in. I really doubt they will care that was from past sales, and how do I prove my loss will come in future income? My income per policy is spread out over 6 yrs.

I really don’t expect a chance to litigate that. I expect to pay back most of this.


Sent from my iPhone using TGR Forums

[Aldo]

Notified this am. Approved. Through chase.

Sense of relief for sure, i'm still open staying busy jobs keep coming in door but each week has been getting a bit scarier as I've gone through my monthly cash cycle. One one hand I'm ready to close the shop and go to a bar until Monday with the guys.
On another I've got a familiar feeling to playing golf in a match play event, you've just won a hole, now you want to step on your opponents necks. No time for complacency - onward.

[Bunion 2020]

Lot of hand wringing.

I took P3 money as a precaution, it is 6 months deferred.

If my business doesn't take a hit and I have to give the entire thing back, no harm, no foul, I didn't go out and spend it.

Its not "Free Money".

[Core Shot]

Lot of hand wringing.

I took P3 money as a precaution, it is 6 months deferred.

If my business doesn't take a hit and I have to give the entire thing back, no harm, no foul, I didn't go out and spend it.

Its not "Free Money".

Actually, it was intended to be free money, if you hit the 75% payroll.

1106(i) TAXABILITY.—For purposes of the Internal Revenue Code of 1986, any amount which (but for this subsection) would be includible in gross income of the eligible recipient by reason of forgiveness described in subsection (b) shall be excluded from gross income.

Fuck the IRS

[Bunion 2020]

And that is the reason we are Trillions in debt.

There is no such thing as free money but you go ahead and blame the IRS.

[GoldMember]

I'm seeking some advice from our accountant on this tax question but, as I see it, it works like this:

SBA ultimately grants you $100,000 in forgiveness.
You use that $100,000 as reimbursement for payroll expenses, mortgage interest/rent/lease, and utilities
You are flush for expenses versus income for those two items
You used your payroll employees to perform work during the eight week period
You charged your customer for employee hours spent on their job and collect an additional $60,000 in revenue for their time
That $60,000 doesn't have any actual cost against it since you've been reimbursed for that time through PPP
You don't get to claim those hours as deductible expense in your ordinary business expense as that would constitute a 'double-dip' for tax deductibility.

I don't really see the problem. The forgiveness is outside ordinary income and is a reimbursement of expenses for ongoing operations. In your ongoing operations, you expended the money you were reimbursed for, how would you justify counting an expense for which you were reimbursed?

I think you guys are overthinking this.