Comments on: The 50 Percent Section 2301 Employee Retention Credit

By: Steve

Steve — Fri, 03 Apr 2020 14:01:13 +0000

In reply to Robert Goslee. Yes.

By: Robert Goslee

Robert Goslee — Fri, 03 Apr 2020 04:40:26 +0000

Are 100% owners of s corporations wages eligible for the credit?

By: Steve

Steve — Thu, 02 Apr 2020 22:24:46 +0000

In reply to Lisa Z.

You need to first determine your period of eligibility.

If you’re using full or partial suspension to become eligible, the eligibility started the day the governor closed or partially closed your school. It ends the day you guys are back in action. Within that interval, you’ll be able to take the 50% credit on up to $10,000 of qualified wages per employee subject to the rules described in the blog post.

Hope that helps.

By: Steve

Steve — Thu, 02 Apr 2020 22:10:46 +0000

In reply to Ryan Lowe.

Regarding the rule for 100 employees or less…It’s in the statute. Very explicit.

Regarding the group of bar owners, I don’t think you’d group businesses unless they were in effect the same entity. BTW, the PPP loan application has you disclose all the other entities applicant owns interest in.

By: Steve

Steve — Thu, 02 Apr 2020 22:08:21 +0000

In reply to Jason. You are right. You can't.

By: Lisa Z

Lisa Z — Thu, 02 Apr 2020 22:06:15 +0000

Hello,
I have read conflicting articles on how to calculate the credit. We are a non-profit preschool and have been closed for the school year by our governor; however, we continue to do some online teaching and collect 50% of our tuition and pay our teachers full salary. We meet the first disruption test for the credit so I thought we would qualify for the credit. I’m not sure we’d qualify for the 50% reduction test as (1) we are still collecting some tuition (not all students are paying but some are paying extra), and (2) we had a different number of students last year —- the math will be close so I was happy to use the first disruption test to qualify and not worry about the close math on the revenue test. However, some articles have said that to actually calculate the credit, you need to start in the quarter where your revenue dropped by more than the 50% -which to me seemed to mean that you really did have to meet the 50% revenue reduction test if that is when you started to calculate the credit. But not all articles have said that, and so I’m confused. My question then is (1) can we take this credit if we have the government order disrupting our business but not a 50% reduction in revenue, and (2) if so, when do we start to calculate the credit (with the first pay period since the shutdown)? Thank you!

By: Jason

Jason — Wed, 01 Apr 2020 22:01:16 +0000

In reply to Steve. I am in the same boat as Chris. I thought you could not take both the Retention credit and PPP loan.

By: Kevin Danilo

Kevin Danilo — Wed, 01 Apr 2020 21:35:11 +0000

In reply to Kevin Danilo.

Steve- one more question/point to make in here for clarification, because it will have HUGE implications.

Do aggregation and affiliate rules apply here?

It sounds like they do, which mean it will knock out small restaurant groups with common ownership (like us, between all 3 restaurants we have approx 150 employees), and any groups who use VC funding.

By: Ryan Lowe

Ryan Lowe — Wed, 01 Apr 2020 21:10:29 +0000

Hi Steve-

Thanks for the great article. Couple questions:
1) I see you noted that all wages count for the credit if less than 100 employees. Do you have a source? I can’t seem to find anything.
2) Also for the 100 employee limit, have you seen anything that ties entities together for this calculation. I have a group of bar owners who own a number of bars all in their own entities. If we combine them all, they are over the 100, if not each one has less.

thanks in advance

By: Kevin Danilo

Kevin Danilo — Wed, 01 Apr 2020 20:06:01 +0000

In reply to Steve.

Thanks for the response Steve!

All restaurants were shut down so the industry is eligible. We all know Q2 will be qualified, since all of April and at least part of May will be gone due to mandated shut down…there’s no way business could catch up to 80% of 2019 Q2. By having a qualified Q2, that means at a minimum, all of Q3 is covered (correct?).

If the above assumption is correct, the “risk” is Q3 bounces back faster than expected and we do not get the credit for Q4…which would be major. But in this scenario, I think we would have hit 10k per employee by this point, so will we’d be losing is “gravy”, i.e. late hires that are just an additional credits.

Let me know your thoughts, the whole industry would is definitely looking for guidance!