Entrepreneurs who took a PPP loan this year cannot write off certain expenses on their taxes if they expect the debt will be forgiven, according to the IRS and Treasury Department. The two agencies have issued guidance to clear up the tax treatment of expenses when a loan from the Small Business Administration’s Paycheck Protection Program hasn’t been forgiven by the end of the year.

The IRS and the Treasury issued both a revenue ruling and a revenue procedure, essentially saying that since businesses aren’t taxed on the proceeds of a forgiven PPP loan, the expenses aren’t deductible. The IRS notes that this results in neither a tax benefit nor harm since the taxpayer has not paid anything out of pocket.

“This results in neither a tax benefit nor tax harm since the taxpayer has not paid anything out of pocket,” said the Treasury in a news release. “If a business reasonably believes that a PPP loan will be forgiven in the future, expenses related to the loan are not deductible, whether the business has filed for forgiveness or not. Therefore, we encourage businesses to file for forgiveness as soon as possible.”

The IRS also notes that in cases where a PPP loan was expected to be forgiven, but it is not, businesses will be able to deduct those expenses. However, if a “business reasonably believes that a PPP loan will be forgiven in the future, expenses related to the loan are not deductible, whether the business has filed for forgiveness or not.”

Recently released guidance in IRS Notice 2020-32 further clarifies deducting expenses for PPP loans. The notice make clear that no deduction is allowed under the Tax Code for an expense that is otherwise deductible if the payment of the expense results in forgiveness of the loan under the CARES Act, and the income associated with the forgiveness is excluded from gross income.

Talley’s professionals have spent hundreds of hours reviewing the law, regulations and SBA PPP FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness audit process.

In an effort to address the growing wage gap between chief executives and their employees, San Francisco voters overwhelmingly approved what is believed to be the nation’s first tax aimed at fighting pay inequity. The “Overpaid Executive Tax,” formally known as Proposition L, will levy additional taxes to any company that does business in San Francisco and has top executives earning over 100 times more than their typical local worker.

Companies with executives who fall into this category face an additional 0.1 percent surcharge on their annual business taxes. The surcharge increases by 0.1 percent per factor of 100, maxing out at 0.6 percent. While Portland, Oregon passed a similar measure in 2018, that tax applies only to publicly held companies. San Francisco’s new measure affects both privately and publicly held companies. A municipal analysis estimates that the tax would bring in roughly $60 million to $140 million, but noted that the amount could vary from year to year.

Opponents to this plan argue that companies could reduce or stop hiring low-level employees altogether as a response to these measures. Such a tax would also dissuade large companies to relocate to San Francisco, ultimately harming the city’s efforts to overcome the unprecedented economic downturn as a result of the current COVID-19 pandemic.

Talley’s experienced team of tax professionals provides comprehensive tax compliance and consulting services so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. We welcome the opportunity to discuss with you the current opportunities available to you. For more information, contact us today.

The SBA decided, in consultation with the Department of Treasury, that it will review all loans in excess of $2 million following the lender’s submission of the borrower’s loan forgiveness application. That being said, the SBA has reserved the right to also audit loans in any amount at any time, and will likely “spot check” loans in lower amounts.

Since the first round of funding was depleted so quickly, and many large businesses were approved for loans they didn’t need, the SBA is stepping up efforts to make sure every loan is going to the right business, for the right amount, for the right purpose.

When would an audit happen? PPP loan audits will be performed when a business seeks loan forgiveness. However, the borrower must retain PPP documentation files for six years after the date the loan was forgiven or repaid in full.

What are some items that the SBA may verify?

  • Eligibility: Was the borrower eligible for the PPP loan based on the rules and guidance available at the time of application?
  • Loan amount and loan use: Did the borrower calculate the loan amount correctly, and did the borrower use the loan funds for allowed expenses under the CARES Act?
  • Loan forgiveness: Is the borrower eligible for forgiveness on the claimed amount?

Are you using PPP funds correctly? If you are looking for the loan to be forgiven, at least 60% of the fund must be spent on payroll and employee benefits, while the remaining 40% on utilities, rent and mortgage interest. This will be verified by examination of your payroll records and expense documentation. If you spend funds on anything else, you could be subject to additional liability or even charges of fraud.

What could happen as the result of an audit? If you are ineligible for the loan or forgiveness amount, your forgiveness application may be rejected by the SBA and they may demand you repay the outstanding loan balance. You may choose to appeal the SBA’s decision.

How can you appeal? Your appeal must be filed within 30 calendar days after: 1. The receipt of the final SAB loan review decision, or; 2. Notification by the lender of the final SBA loan review decision; whichever is earlier. Once the appeal is filed, a judge will issue a decision within 45 calendar days.

Do you need a CPA for a PPP Audit? Although it is not required to have a CPA during this process, having one will help with finding and preparing documents that will be requested during an audit.

Talley’s professionals have spent hundreds of hours reviewing the law, regulations and SBA PPP FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness audit process.

Due to the onslaught of the COVID-19 pandemic, philanthropists have brought new momentum to a less popular style of philanthropy: spend-down, or time-limited, philanthropy; in which charitable foundations spend their assets by a certain date, then close up shop. Foundations and donors alike are realizing that humanitarian and environmental issues won’t be solved by only allocating 5% of their assets to charity every year.

Although this concept is nothing new, it is outside of the norm. About 70% of foundations are designed to exist in perpetuity, while about 30% have established deadlines on their spending, according to a January 2020 report by Rockefeller Philanthropy Advisors and Campden Wealth. Over the past 20 years, spend-down philanthropy has been growing steadily since 2000, and the current crises seem to be accelerating the movement. Comparing Gilded Age philanthropists, like Andrew Carnegie and John D. Rockefeller, to philanthropists today, Gilded Age philanthropists started their foundations when they were in their 70s while today, philanthropists are starting at a much younger age. Philanthropists are also becoming more comfortable throwing money at certain problems because it’s now easier to measure the impact they’re having. People are more and more confident that they can have impact by giving at a much faster rate.

Individuals in favor of perpetuity for foundations say it will take a long time to end problems like poverty, racism and bias against girls and women and contend that doing so will require a slow stream of funding over many years. Although there is clear value in acting with urgency and dealing with pain and suffering in the current moment, there is also a benefit in thinking in terms of generational long-term change.

No matter the amount, your generosity in gifting time and money to worthwhile causes can have a significant impact on your tax liability. While tax considerations should never drive your charitable giving, it makes sense to structure your gifting to maximize the tax benefits. If you have questions regarding your gifting or estate plan, please contact Talley LLP today

The U.S. Small Business Administration (SBA) released guidance last week confirming that Paycheck Protection Program (PPP) loan forgiveness applications are not due on October 31, 2020. In the SBA’s latest loan forgiveness FAQ document, the SBA explains that borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from the loan’s origination, depending on the borrower’s agreement.

Fears of an October 31, 2020 PPP deadline came to the SBA’s attention because the program’s loan forgiveness application forms (3508, 3508EZ, and 3508S) show an expiration date of “10/31/2020” in the upper-right corner. This prompted the SBA to calm PPP borrowers’ fears of a surprise deadline by issuing a new entry in its loan forgiveness frequently asked questions document answering “Is October 31, 2020, the deadline for borrowers to apply for forgiveness?”

What is the Paycheck Protection Program (PPP)? The PPP is a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This act authorizes the Treasury to use the SBA’s 7(a) small business lending program to fund loans of up to $10 million per borrower that qualifying businesses can spend to cover payroll, mortgage eligible costs.

Talley’s professionals have spent literally hundreds of hours reviewing the law, regulations and FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness process.

As 2020 is coming to a close, employees of both large companies and small businesses are finding themselves in a rut as they continue to work from home. A survey conducted by FlexJobs and Mental Health America found that 75% of people have experienced work burnout and 40% said they felt it during the pandemic. Between job-less worries, work-from-home challenges and feeling overwhelmed, it’s easy to understand why both businesses and employees are experiencing work burnout as well as other mental health issues.

  • Acknowledge the problem. The first step in managing burnout is to acknowledge that you’re dealing with it. The symptoms of work burnout, as defined by the World Health Organization (WHO), include feeling: emotionally and/or physically drained; mentally checked out at work; excessive pressure to succeed and the need to hide personal concerns while at work. If you’re concerned about your mental health, you can take a free confidential and anonymous online screening at the Mental Health America website here.
  • Look into employer-provided mental heath benefits. These include telemedicine screenings, employee assistance programs and stress reduction programs. If your employer doesn’t provide assistance, look into services offered through local nonprofit agencies, veterans organizations or your state office of mental health.

  • Establish firm work/life boundaries. When you work from home, it’s critical to set healthy boundaries to keep the stress and demands of work from interfering with home life and vice versa. While not everyone has the option to dedicate a room in their home as their personal office, try to create a dedicated workspace that limits as many distractions as possible. Focus on work tasks before personal tasks, especially in the morning; later in the day, when you need a break, you can squeeze in personal tasks, exercise, or a fun activity to unwind.

Talley shares the same entrepreneurial spirit that has helped propel our clients to their current levels of success. With over 25 years of experience assisting high net worth individuals and business owners, Talley has the expertise necessary to help entrepreneurs throughout their entire journey, from formation to succession.

The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, earlier this week released a simpler loan forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less. This action streamlines the PPP forgiveness process to provide financial and administrative relief to America’s smallest businesses while also offering additional guidance on lender responsibilities.

Simplifying Forgiveness for Many. Under the new Interim Final Rules (IFR), Businesses that borrowed $50,000 or less won’t have the amount of their PPP loan forgiveness reduced based on reductions in full-time-equivalent employees or reductions in employee salary or wages. The newly simplified forgiveness application, Form 3508S, can be used by borrowers with a total loan amount of $50,000 or less, unless they and their affiliates received loans totaling $2 million or more.

For PPP loans of all sizes, the IFR also contains guidance on lender responsibilities with respect to the review of borrower documentation of eligible costs for forgiveness in excess of a borrower’s PPP loan amount.

Congress created the PPP as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27. The legislation authorized Treasury to use the SBA’s 7(a) small business lending program to fund loans of up to $10 million per borrower that qualifying businesses could spend to cover payroll, mortgage interest, rent, and utilities.

PPP borrowers can qualify to have the loans forgiven if the proceeds are used to pay certain eligible costs. The program stopped accepting applications on Aug. 8 with almost $134 billion of congressionally approved funds remaining unspent.

Talley’s professionals have spent literally hundreds of hours reviewing the law, regulations and FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness process.

Have any questions about the PPP? Contact Us.

There is little disagreement that effective decision-making is one of the most important skills we must hone to achieve success in almost every aspect of our lives. People tend to believe that their feelings don’t bias their “logical” decisions but studies have shown that emotions are critical to decision making. Estate planning is no different. No matter how you look at it, when people are involved, emotions are always going to be part of the equation. Let’s take a look at how emotions can affect your goals in estate planning.

Estate planning can be a morbid topic for many.  One of the most common emotions in estate planning is fear. Speaking about death or incapacitation and what’s going to happen once you’re gone is an unpleasant topic that people tend to avoid. Most would agree that estate planning is important, yet all too often many fail to act. Case in point, 55% of Americans don’t have a last will. Being uncomfortable or afraid of the subject can lead to two of the biggest mistakes one can make when it comes to estate planning: avoiding it all together, or not reviewing your plan often enough to account for life events that can have an effect on your estate.

While estate planning can be a stressful and emotionally-charged topic, it can also be a lengthy and overwhelming process for many. Establishing a detailed plan can take anywhere from six months to two years. The lesson being that it’s never too soon to get started. Not all estate plans for business owners or high net worth individuals are the same, and each should be customized to fit your ever-evolving individual circumstances and needs. The key is to not become overwhelmed by the process and focus on your family’s goals and desires. Some even get creative with their estate planning!

It’s not just about transferring the largest amount of money possible to heirs free of estate tax and shielding money from creditors, it is about defining and executing your legacy as well as clearly communicating it to all those involved. The most well-intentioned, technically sound plans can reap negative unintended consequences if they are not communicated clearly to the beneficiaries, and disputes can and will arise.  See our article on Robin William’s estate troubles as an example of this.

Though your options are virtually limitless, proper estate planning -deciding on the “who, what, when, and how” and executing this with the least amount paid in taxes, legal fees and court costs possible can be a challenging and emotional affair to wrestle with alone. For more information, contact Talley LLP today.

From Olympic medals to national championships, the world of elite sports is full of inspiring stories of hard work and determination. Similar to the career of an entrepreneur, success in this profession doesn’t come easy. Being a star player often requires long hours, creative thinking, and commitment to the team. Although physical talent is key to an athlete’s success, their mindset is even more critical and can teach entrepreneurs a few lessons on how to be equally victorious in the board room.

Continue to set goals and improve. Plateauing is both an athlete’s and an entrepreneur’s worst enemy. An athlete must set performance goals and create a plan to achieve new career milestones. Consistent practice and self-evaluation allow them to perform their best as a competitor. Likewise, entrepreneurs should set overall goals to keep their businesses moving in the right direction. They should focus on making a game plan that will help them improve as they continue to grow. Breaking their overall goals down into micro-goals is one way they can make tracking their progress more manageable.

Don’t be afraid to take risks. Most successful athletes did not get where they are by playing it safe. Risk and reward often go hand in hand, so pushing that extra mile or taking that final shot are what differentiate elite athletes from the average player. Finding a balance between risk and recklessness is also critical for entrepreneurs. Being too scared of change will inhibit growth, and changing too much at once will cause failure. Calculated risks are the solution to keeping a business ahead of competitors while taking potential concerns into account.

Keep your head in the game. The greatest athletes in the world are also recognized as leaders. Their hard work, ambition, and drive are qualities any director, CEO, or business influencer can aspire to possess. If an athlete makes a mistake, being able to separate their failures from their present performance allows them to continue reaching for success. Entrepreneurship may be one of the most challenging business environments, but business owners must maintain a level head throughout the ups and downs. Entrepreneurs need to stay confident in themselves even when the odds are stacked against them.

Talley shares the same entrepreneurial spirit that has helped propel our clients to their current levels of success. With over 25 years of experience assisting high net worth individuals and business owners, Talley has the expertise necessary to help entrepreneurs throughout their entire journey, from formation to succession.

Bipartisan Problem Solvers Caucus Unveils COVID-19 Stimulus Framework

Earlier this week, the bipartisan Problem Solvers Caucus (PSC), comprised of 25 Democrats and 25 Republicans from the House, unveiled its “March To Common Ground” framework to help break the gridlock on the latest COVID-19 relief package and encourage negotiators to get back to the table.

The package addresses key areas of need, including COVID-19 testing, unemployment insurance, direct stimulus, worker and liability protection, small business and non-profit support, food security, schools and child care, housing, election support, and state and local aid.

In light of the urgent needs facing millions of Americans, families, and small businesses, the framework is designed for a six month horizon and through the next inauguration, except for state and local funding which extends for a full year.

Depending on the severity of the pandemic and if a successful vaccination program is adopted by March, 2021, a system of automatic “boosters” are designed to incrementally increase the amount of relief to individuals and families. Conversely, a system of “reducers” will decrease the total cost of the package.

A Summary of the Proposed Framework

  • $280 billion in funding for $1,200 stimulus checks plus $500 per child plus dependent adults.
  • The PSC’s framework includes $100 billion of additional health care spending – testing and contact tracing, healthcare provider support, and forgiveness of Medicare loans to providers.
  • $11 billion would go to enhance WIC and SNAP through March and July 2o21 respectively. (WIC is a nutrition program for Women, Infants and Children. SNAP is commonly called “food stamps”).
  • There is $25 billion for rental assistance, rent stabilization and an eviction moratorium through January 2021 and student loan forbearance through December 31, 2020.
  • The unemployment provision is $450 per week for an eight-week transition period. That is followed up by up to $600 per week but not to exceed 100% of previous wage for thirteen weeks through January 2021.
  • Reappropriating $145 billion of PPP money and adding $95 billion in new money with simplified forgiveness and $50 billion for the Employee Retention Credit.
  • $145 billion for schools and child care.
  • Half a trillion in aid to state, local, territorial and tribal governments and
  • $400 million for election security.

The proposed framework would include automatic reducers and boosters depending on how things go based on Covid-19 hospitalization metrics and vaccine progress. If things get better more quickly PPP, state and local aid and renters assistance could be carved back by as much as $200 billion.
Alternatively, if things get worse, the framework’s “boosters” include a 3-month extension on the unemployment benefits starting in February 2021 and another $280 billion for automatic stimulus checks in March 2021.

Meanwhile, Congress is expected to focus in the coming weeks on passing legislation funding the government beyond Sept. 30, the end of the current fiscal year.

Talley LLP shares the same entrepreneurial spirit that has helped propel our clients to their current levels of success. With over 30 years of experience assisting high net worth individuals and business owners, Talley has the expertise necessary to help entrepreneurs throughout their entire journey, from formation to succession.


1 2 3 4 5 6 7 26
Archives