Late Monday night both houses of congress passed, and President Trump is expected to sign, a new stimulus bill that includes many tax provisions, as well as a new round of PPP funding.
Below are highlights of some of the provisions:
- Deductibility of expenses paid with PPP funds:
- Taxpayers whose PPP loans are forgiven are allowed deductions for otherwise deductible expenses paid with the proceeds of a PPP loan. Also, the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness.
- PPP round two:
- A second round of forgivable PPP loans are available for businesses with the following criteria:
- Have 300 or fewer employees
- Have used, or will use, the full amount of their first PPP loan
- Experienced a 25% gross revenue decline in any quarter of 2020 compared with the same quarter in 2019
- For the first time, PPP loans are available to 501(c)(6) organizations that meet certain criteria.
- PPP simplified forgiveness:
- For PPP round one and PPP round two loans of $150,000 or less, there will be a simplified one page application process released by the SBA.
- PPP forgiveness will no longer be reduced by the amount of an EIDL advance.
- Employee retention credit:
- Business that have, or will, take a PPP loan are now eligible to take the employee retention credit.
- The refundable credit has been increased from 50% of quarterly wages paid up to $10,000 to 70% of wages paid up to $10,000.
- Business meals:
- Generally, the deduction for business meals are limited to 50% of the otherwise deductible amount. For 2021 and 2022, this 50% limit does not apply for food or beverages provided by a restaurant, making these expenses 100% deductible.
- Flexible Spending Arrangements (FSA’s):
- For plan years ending in 2020 and 2021, the grace period to carryover unused amounts remaining in a health FSA and depended care FSA is allowed to be extended to 12 months after the end of such plan year.
- Rebate checks:
- Individuals will receive $600 “recovery rebate” per eligible family member ($600 for individuals, $1,200 for married filing jointly, and $600 per qualifying child).
- The eligible amount is reduced at a rate of $5 per $100 of additional income over $75,000 of modified adjusted gross income for individuals, $112,500 for heads of households, and $150,000 for married filing jointly.
We are here to help:
Contact our team at Hungerford Nichols CPAs + Advisors if you have questions on how this will impact you and your business or organization.
Phone: (616) 949-3200
Contact our team at Hungerford Nichols if you have questions on how this will impact you and your business or organization.