JohnH

You shouldn't use Schedule C to report a H&U allowance. I don't use ATX, but I'll bet it has a worksheet for properly reporting the H&U allowance. The worksheet should require you to calculate the lower of 1) Actual amount designated, 2) Amount actually paid, or 3) FRV of house (fully furnished & all utilities paid). The amount designated is then taken directly to Schedule SE, and the amount taxable (if any) is added to W-2 wages & salaries with a notation of "Excess H&U Allowance). Drake has an excellent, intuitive worksheet for this. I assume the ATX worksheet is similar in layout & function to the one Drake uses. Calculating the H&U correctly is a simple process, but not necessarily easy the first time you use it. After the first couple of run-throughs it makes perfect sense.

If you have trouble texting, you can always set up an inexpensive bluetooth keyboard & connect to your phone to use when typing a lengthy text. But that's a little cumbersome when you're on the go. There are probably more exotic ways to print texts, but I just take a screen shot & email it to myself. Or just print the screenshot directly to a printer connected to the phone via wifi. I don't feel the need to keep a written record of every text. It all depends upon the seriousness of the conversation. Some of my texts lately looked a lot like like this: ->: "Do you know when my stimulus payment's going to be here?" A-> "I don't know. Here's the link to IRS ........"

Maybe your experience is different than mine, but I know for a fact I would lose some clients if I didn't text with them. Since I'm more or less on a retirement glide path, that isn't terribly important to me, but if I had 10-20 years ahead of me before retirement that would be a concern for me. Those millennials will eventually go somewhere else if you can't/won't communicate with them in the way they're accustomed. As it is, I'd probably get rid of certain of my clients if they didn't text (or at least email). So in my case there's a bit of a reversal of priorities on this issue.

I've run few scenarios, and it appears that all my clients will be fine with a stretch to 12 weeks or longer, even if the 75% rule doesn't change. (and provided they don't alter other aspects of the forgiveness requirements). That makes sense, since the original calculation was based on 2-1/2 weeks of 2019 payroll. It still seems to me that everyone who received the Advance EIDL and then a PPP will wind up with the Advance-EIDL dollar amount of their PPP unforgiven, if I'm understanding the rules correctly. That isn't a complaint - just a reality. It also makes sense if you follow the logic. But if Congress changes that, I wouldn't complain.

I agree completely with the strategy in your final paragraph. Once your clients know your voice mail response is slowest while email and text response is fastest, most will quickly shift to email and/or text. I always tell them I generally respond to email & text rapidly, but phone messages sometimes take a day or two. (Often the initial response is "I've seen your message and I'll get back to you ASAP", but that seems to satisfy them as they have the comfort of knowing I'm thinking about their question. And if their question truly is time-sensitive, I can get to it appropriately) With a couple of exceptions, even my oldest clients have become habitual email/text communicators. Many of my older clients have developed hearing problems (as I have), so I believe this is one reason they've jumped on the email/text bandwagon. More and more of these seniors tend to text, and these days you almost can't communicate with anyone under 45 unless you text. Since texting is fairly easy to preserve, I'm just as fine with it as I am with email. In any event, email/text questions tend to be more focused since they must spend a little time thinking about they're typing. (Same goes for my reply). Voice conversations frequently tend to be mind-dumps, useless background, or a rehash of what their brother-in-law told them about tax law. And when the email/text we don't waste a lot of time talking about the weather, COVID, riots, grandkids, our latest doctor visit, and all the other interesting diversions we're all subject to be drawn into. If anything, written communications can sometimes be too sparse, but that's pretty easy to rectify with a well-crafted response.

Thanks Bart. I think this link needs to be pinned as a resource at the top of this COVID-19 forum.

Sorry, I had a typo in my reply, but you got the point nevertheless. I meant to say "stating they have two employees when in fact they have none"

Oh no! Judy, I was convinced my Facebook arguments were so persuasive they were winning people over to my political opinions and religious views on a regular basis. I'm crushed.

Do you think maybe they filled out the Advance EIDL application incorrectly, stating they have 2 shareholders when in fact they have none?

In my state WC is not a state or local tax and it isn't an employee benefit. It is an insurance plan which simply follows special state guidelines. Not that much different than auto insurance or General Liability insurance. So as much as I'd like to see it included in the forgiveness category, I don't see how based on the info we have now.

I did have one humorous conversation with a friend (not a client). We were discussing an issue of his which is similar to an issue of mine. I finally said something to this effect: "I'm telling you what I'm doing, but I'm not telling you that you should be doing what I'm doing. I may suddenly change what I'm doing if I get different info from the SBA. And I can't promise I'll remember to tell you I changed what I'm doing because I may not even remember this conversation a week or more from now. So take this conversation for what it's worth." He responded "I get it and I appreciate your honesty" (I'm sure in the back of his head he was thinking "I need to keep asking John what he's doing about this.")

Great points Tom. I just started a separate thread on the subject of a special PPP disclaimer, if you (or Lion or cbslee or anyone else) might care to comment. I'm getting concerned about the risks here.

I've become very circumspect about giving advice or opinions about PPP loan forgiveness compliance. I even accidentally posted a rumor on another site in the midst of warning about internet advice based on rumors. Anyhow, I'm beginning to think it might be a good idea to come up with a special disclaimer when discussing PPP with clients. I don't want someone's PPP loan forgiveness to fail in part or in total because they acted on something I said (or something they thought I said). There's just too much at stake with this PPP loan forgiveness. Does anyone here share those concerns and do you have any thoughts on what a special disclaimer may look like?

These problems are a result of the IRS trying to comply with the impetus to push stimulus payments out as quickly as possible in order to achieve an economic goal. They've basically turned an aircraft carrier around in the middle of a battle. The goal of getting the payments out is being achieved in an exceptional manner, but naturally it's messy given the conditions and time frames. I'm not one to compliment the IRS very much, but I think under these circumstances they're doing a fantastic job.

Good result! Be thankful the parents didn't ask you to advance him until he gets it.

Print money? Is that how they do it? I thought the government just went out and got a second job to pay the extra bills when it spends more than it takes in. Wow, was I wrong or what?

I'm still trying to decipher this, especially in light of what happened to me. I received a $2,000 "Advance EIDL" a couple of weeks ago. Thereafter I applied for a PPP, and on the PPP application I reported that I had already received the $2,000 Advance EIDL. I expected the PPP to be a flat 2.5 times my average monthly payroll for 2019. But what I actually received was the 2.5 times my average payroll PLUS $2,000. Some of my clients have received their PPP now, and each of them received the exact amount of 2.5 times their average monthly payroll for 2019. Each of them had previously received their Advance EIDL. I'm the only person so far to have received the PPP in this fashion, and none of my clients do business with the bank I received my PPP from, thus I have no standard of comparison. So either my bank is doing it correctly and everyone else's bank is wrong, or..

I never thought of it as being any other way. It would be absurd to allow a tax deduction for an expense which was paid by a third party. If I volunteer to pay my client's payroll and rent, common sense would indicate they wouldn't expect to take a tax deduction for it.

Medlin's analysis is awesome. Thanks for sharing your knowledge and recommendations on this. I think I'll switch from my erratic "as cash is available" payroll frequency to a weekly payroll for the next 8 weeks.

I went through a similar thought process when applying for the PPP. I'm operating as an S Corp, so I could have easily included the SEP. But I couldn't get any clear guidance at the time so I elected to use S&W without the SEP. It lowered the amount I could borrow but I didn't want to jeopardize the entire application with a potentially insupportable entry. In retrospect I should have run with it. But now at least I have sufficient flexibility to help meet & exceed the 75% requirement.

Yes, functionally the SEP is a benefit identical to a Medical Insurance plan, and there's no question that the MIP is subject to PPP forgiveness. That's part of what makes me inclined to think the SEP contribution would be subject to PPP forgiveness.

That question definitely needs to be settled. Thanks for the heads up. The examples I've seen use the SEP as one of the permissible items to be used in the PPP loan calculation and also in the calculation of the exclusion. They even go so far as to say that the full SEP contribution counts even when the annualized compensation exceeds $100K and is capped (which doesn't apply to me, BTW ). But obviously the final answer will be based on what SBA says is correct. Definitely keeping an eye on this one. It offers some interesting & unique financial planning opportunities for a sole owner.

Your mention of the SEP IRA is an interesting angle as well. I usually fund my prior-year SEP IRA just prior to the extended filing date for the corporate tax return. Wondering if I could designate money toward the current-year SEP IRA within the 8-week window from PPP funds in May, then designate funds for the prior-year SEP IRA later in the year (late Aug or early Sept). It all goes into the same SEP IRA account, but I am able to designate the year at the time the money is transferred into the account. This might work well for a couple of my clients if it's possible to do within the constraints of the SBA rules.

I thought this article presented a very balanced, reasonable perspective on the PPP loan and how to think & act regarding under-spending (less than full loan forgiveness if it appears likely). https://www.forbes.com/sites/tomhager/2020/04/21/you-need-to-change-your-thinking-paycheck-protection-program-ppp/#4bc590e197c0

Best practice is to go to the USPS Zip Code Lookup and determine exactly the address should be formatted. Use this exact format (even if it was slightly different on the original return). I've been through this with a few clients. Believe me, it's worth the effort to check the USSPS site before entering address info on the IRS site. https://tools.usps.com/zip-code-lookup.htm?byaddress