Comments on: PPP Loan Tax Returns: What We Know Now

By: Stephen Nelson CPA

Stephen Nelson CPA — Mon, 07 Dec 2020 13:44:11 +0000

In reply to LaDonna Keener. I don't think so. That's really the point of this blog post.

By: LaDonna Keener

LaDonna Keener — Tue, 01 Dec 2020 18:16:58 +0000

Will there be a reporting requirement for loan forgiveness of “owner compensation replacement” in the 2020 1040 return? It seems clear when using forgiven PPP loan money for rent or utilities but unclear for funds used for owner compensation of a sole proprietor.

By: Worried Consultant

Worried Consultant — Mon, 30 Nov 2020 17:34:02 +0000

Thank you for this article! If anyone knows how to help me, I would appreciate advice. I started my business in late 2019. Being a new business, I operated at a loss during 2019. In January and February of 2020, I started to see the fruits of my labors and I was doing very well. Then, Covid hit. When the PPP loan came out, I had not yet filed my taxes for 2019. I applied for PPP using Q4, 2019 and Q1, 2020 income. I showed paid invoices and such. They gave me the loan for $17,000 which was 2.5 times my salary to that point. Well, like so many of you, I found the virus decimated my ability to travel and conduct my consulting business. I took the $17K and I made 24 withdrawals from my bank account to myself (once weekly, on Fridays) so that I would have a record of me disbursing the funds as my weekly payroll. When the forms came out for forgiveness, it stated that I need to use my 2019 Scheule C for forgiveness! I was floored because that was never used to grant me the PPP. Again, I started the business in late 2019 and didn’t have the profit. I was rolling in 2020 and this virus crushed me. What can I do?
Can I get PPP forgiveness using some quarterly statements and not my 2019 Schedule C? Thank you in advance for any help. I am so worried now.

By: Avoiding Taxes on PPP Loan Forgiveness – nelson.cpa

Avoiding Taxes on PPP Loan Forgiveness – nelson.cpa — Mon, 30 Nov 2020 14:10:35 +0000

[…] Note: Our last blog post at Evergreen Small Business digs deeper into the details and mechanics, in case you’re interested: PPP Loan Tax Returns. […]

By: Stephen Nelson CPA

Stephen Nelson CPA — Fri, 27 Nov 2020 15:49:59 +0000

In reply to Drew Schofield. Your sole proprietorship needs to pay Drew the proprietor. Those payments count as owner compensation. BTW, you should be using the 3508S form. And you should, I would think, get full forgiveness.

By: Drew Schofield

Drew Schofield — Wed, 25 Nov 2020 22:20:05 +0000

I get a 1099 as an independent contractor doing some web design and marketing work. I got a PPP Loan for $17k. I am looking at the 3508S and trying to understand how I get Owner compensation relief. I got 17k deposited in my account from my bank. I went thru the typical monthly expenses, but have no ‘payments’ or draws to myself. I’m not understanding how the application works in my case.

By: Stephen Nelson CPA

Stephen Nelson CPA — Tue, 24 Nov 2020 19:32:30 +0000

In reply to Kevin Strel.

Good question Kevin. And what I’m still thinking is, we do want to have partnerships pay partners that “owner compensation replacement.” And I’m also still thinking guaranteed payments work.

For other readers, here’s the blog post referenced: http://evergreensmallbusiness.com/sole-proprietor-and-partnership-ppp-tax-rules/

By: Kevin Strel

Kevin Strel — Mon, 23 Nov 2020 21:53:11 +0000

Do you have an update on how you would structure the payments to partners in a partnership when this will be the basis for forgiveness. In your August article, you leaned toward calling them Guaranteed Payments, however I wasn’t clear if you were certain that this expense could still be taken since it was paid with PPP funds.

Do you have any new thought on this given the new guidance?

By: Stephen Nelson CPA

Stephen Nelson CPA — Mon, 23 Nov 2020 20:00:20 +0000

In reply to Kathryn Salerno. No I think you did it right. The wages should have appeared on the 941.

By: Stephen Nelson CPA

Stephen Nelson CPA — Mon, 23 Nov 2020 19:59:40 +0000

In reply to Kathleen Dienhart.

I think you mean SB 3612… (Bill text here: https://www.congress.gov/bill/116th-congress/senate-bill/3612/text )

But I don’t think that’ll pass. First, I see significance in the fact that Congress already made one set of changes to the PPP in June and didn’t at that time include the text of the May 3612 bill. Second, I see significance in fact that they haven’t been able to pass additional legislation that extends the program.

BTW, I have a terrible track record of predicting what tax laws will actually pass. Maybe most people do.