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New Relief Package Set to Allow PPP Covered Expense Deductibility, Expanded Credits and Stimulus Payments
Over the last couple of months, we have been fielding questions from many clients about the CARES Act – especially the loans and the forgiveness of loans available for small businesses that we outline in our Coronavirus Resource Center. I actually co-wrote an article back in March with Jennifer Mailhes, CPA from Doeren Mayhew entitled “Five Things Small Businesses Should Know About the COVID-19 Disaster Loan Relief”.
Congress has finally settled on a new COVID-19 stimulus legislation – The Emergency Coronavirus Relief Act of 2020, which expands the employee retention credit, extends various expiring tax credits, distributes stimulus payments, and allows the deductibility of Paycheck Protection Program (PPP)-funded expenses, even if forgiven…this is a big change from prior IRS Accouchements. As an example, If you had a forgiven $100,000 PPP Loan that you used for payroll and other allowable expenses, earlier this year, the IRS stated that these expenses were not deductible. With that PRIOR IRS interpretation, someone in the 37% tax bracket would have had an extra $37,000 tax liability. With this legislations Congress corrects that problem allowing impacted businesses to deduct these expenses – with the majority being employee payroll (remember the legislation was the “PAYCHECK Protection Program”) that helped many employees from being furloughed.
The $900 billion bill, the second-largest next to the Coronavirus Aid, Relief, and Economic Security (CARES) Act in U.S. history, would initiate the following relief measures, among others:
It is anticipated that President Trump will sign the bill into law before the new year…so stay tuned. Both STA Wealth and Doeren Mayhew will keep you updated as the bill progresses through the legislative-making process.
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