Lion EA

Your client can hire new employees. He may have employees who choose not to return. He doesn't have to have the same exact employees; but if he does, don''t cut their salaries without a business reason (can't open fully, etc.) Work through the forgiveness application and instructions, even though it might change again. See the safe harbors, such as what percentage drop in FTE &/or salary won't reduce forgiveness, alternate comparison dates, etc. Does your client have other allowable expenses to make up to 40% of the loan? Compare a small drop in forgiveness/loan at 1% for 5 years vs hiring an unnecessary employee.

You do realize there will be at least one more revision of Form 3508. Maybe Form 3508-EZ will stay the same, maybe, unless there's some sort of universal forgiveness for the smaller loans. Is your bank taking forgiveness applications yet? Most are waiting on final final regulations and building their own online application for borrowers to fill out. I've heard banks give dates like mid-July and late-July to accept submissions. Relax. Breathe. Go back to preparing tax returns for pay. Give your clients lists of documentation to gather. Stay well.

Eric Green is.

I haven't had to research that scenario for a client. Don't forget you might have depreciation you can't exclude if your client built (or purchased with the land) a barn, fences, drainage tile, or anything else that could be depreciated on his ranch.

If I'm following which was 2019 vs 2020, I think you're right. I haven't taken numbers through the forgiveness application, yet. I expect more guidance. But, they've pretty much laid out the case for owner-employees.

Oh, your case an owner earns $80,000/year in 2020 but earned $90,000 with his bonus in 2019. Then 8/52 X $80,000 is still his max forgiveness. If his loan was larger, based on 2019, then he has the two choices cbslee said.

His residence acreage will be the area he used for his home and personal use. The business acreage will be the area he used for his ranching activity. He will report two sales.

Isn't it 8/52 of their salary, capped at $100,000/year and limited to 2019? If one owner earns $90,000 annually in 2020 but $80,000 in 2019, then 8/52 X $80,000 is that owner's max forgiveness. (But, I haven't filled out a forgiveness application, yet.)

You don't have to hire anyone new, family or not, for forgiveness. You just have to keep the same number of FTEs within allowable ranges and salaries. If employees choose not to return, just confirm that; or if you can't open up fully (a restaurant allowed only 50% seating, for example), you don't need all your employees for forgiveness. You can employ family, for the loan application or for forgiveness. Just don't go randomly raising owner salaries with PPP funds.

This has all been very helpful. Both of them work, so their tax liability is enough to use up the solar credit in one year. Their system will cost under $29,000, and the kids calculated their 2020 credit at under $7,000. They do have one child and the CTC. He hasn't been at daycare very much this year, but will return by July, so a small CCC. I ran a pro forma return. My challenge now is to help him reduce his w/h so they get more now instead of a huge refund next year. Although, with current interest rates and short-term investment opportunities, maybe it doesn't matter!

Thanx, Deb & JRS. It's my kids, of course. All the new things I have to read up on come from my family freebie returns! But, these kids did some of their own reading and ran some numbers and got multiple bids. They turned down solar at first. But, then they took down a couple of dead trees and thought they'd give it another look now that they have less shade on their roof. Sure enough, recent quotes use fewer solar panels so cost less. They're back considering it seriously. SIL is taking a pay cut for the rest of the year due to Covid-19. They're both working from home due to the virus and also are considering A/C. I'm talking to them Tuesday. Probably help them lower current w/h.

First time running into a solar credit. Quick reading suggests a NON-refundable credit that will take tax liability down to zero but not lower. It can be carried over if not used up. But, client wants to use it up on their 2020 tax return, because they are financing it now and will need to pay it off next spring/summer. I ran a quick pro forma using 2019 software. Refund increases dramatically. Anyone work with the new W-4 yet? How easy is it to calculate a new W-4 that'll give them more take-home pay now to save for the time they have to pay off their solar installation? I'm open to suggestions on helping them with tax planning. And, I'm open to leads on reading more about a solar credit.

This changes almost daily, but following the flow of the forgiveness application, it appears that the EIDL grant gets folded into the PPP forgiveness and turns into a 1% loan for 2 or 5 years, maybe?! Well, "this" doesn't change almost daily, but the PPP and the forgiveness application and the instructions and the interim final regulations and...

Remember that the income tax-free housing allowance is the lessor of the three detailed in earlier posts. You should compare the three to make sure you're using the right amount. Actually, if ATX's worksheet follows those in the IRS's directions and you make use of the ATX worksheet, you should be fine. But you do have to know the Fair Rental Value (something like a letter from a local realtor on her letterhead) and the actual expenses (add up your client's receipts) to know for sure which amount to use.

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There should not be a schedule C if the only clergy income was W-2 wages plus the housing allowance. The prior tax preparer may have schedule C as some sort of template or as a way to flow the HA to Sch SE depending on her software or even due to some actual income such as honoraria. Or, she may've been doing it wrong. Clergy taxes are a specialty that I've not tried. A different beast. I think of clergy taxes as kinda a backwards statutory employee, and I don't specialize in those either. But, you could have yourself a long-time client if you prepare her returns correctly. Get the resources cited above, especially any books by those three authors; take webinars; get the resources available from your client's national church. Find a mentor to point you in the right direction; it'll be worthwhile to pay for outside expertise if you gain a long-time client. If your mentor uses your software, that's even better, because some of your questions are how to do it in your software and not just tax law questions. A few tips on how to enter data and then a review at the end by an experience clergy tax preparer can give you a new client and a new niche. See what you can find for your client's church. Here's a brief page from the Church Pension Fund of the Episcopal Church that gives an overview plus a couple of publications, one specific to the Episcopal Church: https://www.cpg.org/active-clergy/learning/finance/taxes/clergy-taxes/

I don't use that worksheet, but it appears that it is comparing the FRV from a third party with the HA voted by the church with the actual expenses (line 4f) to arrive at the lowest of those three amounts to use as the income-tax free housing allowance for tax purposes. Line 4f is his actual housing expenses. They are to compare to the other two amounts. They are NOT deducted from anything or deducted anywhere.

If the company is in the best shape for forgiveness after 8 weeks, they might want to just go for it. Especially if they might need to lay off employees later this year or cut hours &/or wages and risk having their potential forgiveness reduced using a 24 week window.

https://www.irs.gov/coronavirus/employee-retention-credit

The forgiven loan is not income. However, the expenses used to obtain forgiveness are not deductible. That's why some people are keeping a separate bank account or a separate bookkeeping account for the loan and the expenses paid. You do need to keep the documents for something like seven years after forgiveness or repayment of the loan. At this time, the expenses will be lower, so the profit will be higher. Congress has a bill floating around, but we'll see...

No to either. The old rules are return FTEs by 30 June; the new rule is by the end of 24 weeks or 31 December, whichever comes first. That could be helpful for restaurants and hair/nail salons and hotels who are not open yet or open at 25% capacity and need more time to hire (replacements for those not returning/staying on unemployment).

The term they use is owner-employees. Those appear in a different section of the forgiveness application -- which is due to be revised, so don't rush to turn one in just yet. Probably sole proprietors/ICs/SMLLC members and partners and shareholder/employees of S-corporations. Anybody know if shareholder/employees of C-corporations over a certain percentage of ownership fall into this category? (I don't have any C-corps this year.)

If your client is a clergyperson in a main stream religion, the local, state, &/or national church probably has great resources, including booklets and webinars. Worth and Hammer and Geisler are excellent authors. The IRS has information: https://www.irs.gov/taxtopics/tc417 https://www.irs.gov/forms-pubs/about-publication-517

Also, BigCharts.

I do what Abby says. I use zero basis and tell the client the results. If that motivates them to search their purchase documents or work with their broker(s) or ask grandma when grandpa died or..., then the client will give me dates and basis. If they need help, I tell them my hourly fee -- IF I have the time.