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  • 01/20/2021 8:58 AM | Anonymous member (Administrator)

    January 20, 2021

    By Jeff Drew

    The US Small Business Administration (SBA) and Treasury on Tuesday published updated Paycheck Protection Program (PPP) loan forgiveness guidance and forms, including a one-page application for borrowers that received a PPP loan of $150,000 or less.

    That form, called the PPP Loan Forgiveness Application Form 3508S, can be used by borrowers that received a PPP loan of $150,000 or less. The form seeks information about the borrower’s loan amount, disbursement date, employee totals, covered period dates, amount of the loan spent on payroll, and the amount of the loan for which forgiveness is being sought. Borrowers are not required to submit any supporting documentation with the application but are mandated to maintain payroll, nonpayroll, and other documents that could be requested during an SBA loan review or audit.

    The SBA and Treasury released two other PPP loan forgiveness applications: Form 3508 and Form 3508EZ. Borrowers must submit payroll and nonpayroll documentation when applying for loan forgiveness with those forms, which provide lists of the required documents. In addition, the SBA and Treasury released Form 3508D, which certain individuals must use to disclose controlling interest in an entity applying for a PPP loans.

    Also released Tuesday night was an interim final rule (IFR) consolidating prior PPP loan forgiveness rules and incorporating changes made by The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, P.L. 116-260, which revived the PPP with $284 billion in fresh funding and created second-draw loans, which allow borrowers that received PPP loans during the first iteration of the program last year to seek a second loan of up to $2 million provided they meet tightened size requirements and can document a year-over-year revenue decrease of at least 25% for one reporting period in 2020.

    The IFR and all four of the forms released Tuesday night apply to first-draw or second-draw PPP loans.

    The relaunched PPP began accepting applications Jan. 11 from community financial institutions that loan primarily to underserved businesses. The application window opened Jan. 14 for lenders with $1 billion or less in assets and for all lenders on Tuesday.

    The SBA announced Tuesday that that it approved about 60,000 PPP loan applications submitted by nearly  3,000 lenders, for over $5 billion from the program’s re-opening through Jan. 17.

    AICPA experts will provide a summary of the latest PPP forms and guidance during an online Town Hall on Thursday at 3 p.m. ET. The event is free for AICPA members and $39.99 for nonmembers.

    Accounting firms can prepare and process applications for the PPP on the CPA Business Funding Portal, created by the AICPA, CPA.com, and fintech partner Biz2Credit.

    AICPA experts discuss the latest on the PPP and other small business aid programs during a biweekly virtual town hall. The webcasts, which provide CPE credit, are free to AICPA members. Go to the AICPA Town Hall Series webpage for more information and to register.

    The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

    For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.

    — Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.


  • 01/15/2021 8:37 AM | Anonymous member (Administrator)

    January 14, 2021

    By Jeff Drew

    The .cpa domain application window will open Friday for licensed CPAs to apply for on an individual basis, the AICPA announced.

    Beginning at 10 a.m. ET Friday, individual CPAs can request their preferred branding using .cpa, which is the restricted internet domain for the accounting profession. Thousands of licensed CPA firms and approved organizations, such as state CPA societies, submitted applications for .cpa domains from the program’s launch on Sept. 1 through 6 p.m. ET on Thursday.

    The AICPA was awarded ownership and management of .cpa in 2019 by the Internet Corporation for Assigned Names and Numbers. CPA.com, the AICPA’s business subsidiary, administers and manages the .cpa domain.

    Top-level domains are the handful of letters at the end of an email or website address, such as .com or .org. Use of a .cpa domain allows practitioners to strengthen their brand identity in online communications and provides better security and resistance to internet fraud schemes such as phishing and spoofing, the AICPA said. And because the domain is available only to licensed CPAs and licensed CPA firms, it promotes greater trust with clients and the general public.

    To learn more about .cpa or to apply for the new service, visit register.domains.cpa.

    — Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.


  • 01/14/2021 10:29 AM | Anonymous member (Administrator)

    By Rick Meyer, CPA, MBA, MST

    As we start the New Year, hopefully fresh from all the tax drama, we

    can at least take a deep breath and rejoice about some Covid-19 tax relief. On

    Sunday, December 27, 2020, the President signed into law, what is called, the

    Consolidated Appropriations Act (CAA), a combination of Covid-19 relief

    along with many other provisions amongst the 5,593 pages.

    It seems that with all new tax law, it boils down to some basic chunks of

    data:

    1. The Headliner (we’ve all heard and read about) provisions,

    2. The Extenders,

    3. The Esoteric provisions, and

    4. Everything Else

    This last “everything else” category is where all the fun begins...the never

    ending search to find those buried treasures in the new law. Let’s briefly

    discuss the first three categories and then spend most of our time discovering

    some of those “everything else” hidden gems!

    The Headliner Provisions – The $600 payment per person, expansion of the

    PPP loans, and unemployment benefits,

    The Extender Provisions – 5 year extensions for the Work Opportunity, New

    Markets and Empowerment Zone credits, and the exclusion of income for the

    employee on up to $5,250 of student loans paid by the employer,

    The Esoteric Provisions – Tax reductions for wine, liquor, spirits and beer,

    and of course, we can’t forget about the three-year recovery period for race

    horses.

    The EVERYTHING ELSE Provisions:

    Let’s jump into a few that I would consider to be gems, worthy of discovery:

    Employee Retention Credit

    This is huge! Previously in the original CARES ACT, the employee retention

    credit was the lost sheep. With some new changes, employers could get a big

    payroll tax credit for keeping their employees on the payroll!

    This is now a 70% credit on up to $10,000 of qualified wages per employee,

    PER QUARTER, for the first two quarters in 2021, through June 30, 2021.

    Thus, if employers qualify, they can claim up to $14,000 credit per employee

    in 2021.

    Plus, this even works with employers with up to 500 employees! Note, that

    this is a refundable payroll tax credit offsetting the employer’s portion of

    payroll taxes. So, if these credits exceed payroll taxes, you could get a refund!

    To qualify, the employer’s gross receipts for the first two 2021 calendar

    quarters must be at least 20% less than the 2019 quarter. Alternatively,

    employers can elect to use the prior quarter’s gross receipts to qualify.

    There are various complexities and unanswered questions about how the

    Employee Retention Credit will impact other wage based credits in the tax law

    and how to best optimize utilization of all available credits. A detailed and

    thorough analysis needs to be done with each taxpayer’s facts and

    circumstances. Also, there will need to be further guidance from the IRS and

    Treasury. We continue to be in discussions with current and former members

    of Congress and high level IRS Officials to gain clarity, insight, and

    Congressional intent on this very special and potentially valuable credit.

    PPP (Payroll Protection Program) Loans and Expense Deduction

    The new law clarifies that business expenses paid with forgiven PPP loans are

    tax deductible.

    Section 179D Made Permanent

    If you are an architect, engineer, or contractor, or a CPA with any of these

    clients, this is a huge opportunity for them to claim this, now permanent

    deduction. This deduction applies if they are encouraging green, energy

    efficient design of public buildings. This would include improvements to the

    building envelope, lighting, heating, cooling, ventilation, and hot water

    systems.

    The deduction could be up to $1.80 per square foot. Although the architect,

    engineer, or contractor doesn’t own the public building, they could be

    allocated this deduction from the government entity. It’s like a free deduction!

    Since it is calculated based on square footage, a large high school, elementary

    school, or public library could yield a sizable deduction to the architect,

    engineer or contractor. This concept also applies to owners of commercial

    buildings.

    Section 179D encourages energy efficient designs while reducing energy costs

    for all. It’s a win-win for architects, engineers, contractors, the government,

    taxpayers, and commercial building owners!

    Meal Deduction

    For 2021 and 2022, the 100% deduction for business meal food and beverage

    is back! This includes carry-out and delivery meals.

    Charitable Contributions

    The non-itemizer, above-the-line deduction for cash charitable contributions

    increases to $600 for married taxpayers filing jointly (non-married filers or

    married filing separately are limited to $300).

    Relief for FSA (Flexible Spending Account)

    Remember the “use it or lose it” rule requiring employees to spend money in

    their FSA account for health or dependent care by year end, or lose this

    money? The old rules did allow a carryover of unused funds of $560 to 2021.

    Well, my daughter has been frantically calling me since June of 2020. She had

    over $2,000 contributed to her dependent care FSA. Then, her daycare center

    closed in June, 2020 due to Covid. How could she get this money back? She

    had no other daycare expenses since the family was volunteering to watch the

    kids for free. Would she lose over $2,000 of her hard earned money?

    Well, this little gem of a law eliminates the health and dependent care

    carryover limit. Now, employees could carryover any unused amount from

    either the 2020 or 2021 plan year to the next year.

    What’s Next?

    Buried within the 5,593 pages are many other provisions and hidden gems

    that will need to be discovered, understood, and put to use. We teased you

    here with just a few. Be prepared to read and find more buried treasures that

    could help you or your clients. Whoever said that Congress is trying to simplify

    the Tax Code? Hang in there, get your fingernails dirty and get digging!

    Rick Meyer, CPA, MBA, MST is a long time member of the Illinois CPA Society and has served on various tax committees over the past 40+ years. He is a Director for alliant group, a national firm that works with businesses and their CPAs to identify powerful government sponsored tax credits and incentives. He could be contacted at rick.meyer@alliantgroup.com.

     


  • 01/14/2021 10:28 AM | Anonymous member (Administrator)

    January 13, 2021

    By Jeff Drew

    The application window for Paycheck Protection Program (PPP) forgivable loans will open Friday for lenders with $1 billion or less in assets, the US Small Business Administration and Treasury announced.

    The opening, which will take place at 9 a.m. ET, applies for both first- and second-draw PPP loans.

    The program will begin accepting applications for first- and second-draw loans from large lenders on Tuesday, Jan. 19.

    PPP reopened Monday initially for community financial institutions (CFIs) to make loans to first-time PPP borrowers. CFIs were allowed to make second-draw loans to previous PPP recipients starting Wednesday.

    CFIs typically work with underserved small businesses. SBA and Treasury granted the initial early access to PPP so these small businesses, which include many minority- and women-owned concerns, could get first crack at accessing the $284.5 billion in PPP funding approved in the part of the $900 billion COVID-19 relief bill that was signed into law on Dec. 27.

    The AICPA issued a news release earlier Wednesday encouraging accounting firms to aggressively advance PPP applications for small businesses in anticipation of the SBA beginning to accept applications from all lenders.

    “We believe the full program needs to go live as soon as possible and we fully support the Treasury Department and SBA reopening the program for all lenders,” said AICPA President and CEO Barry Melancon, CPA, CGMA, in the news release. “What we’ve been telling CPA firms is be prepared and get to work. All indications, based on input from the Treasury and SBA, is there will be enough funding to meet all of the ‘first draw’ and ‘second draw’ PPP applications, so firms can help alleviate concerns their clients may have.”

    The AICPA has been advising firms to collect key information from their clients such as average monthly payroll amounts, quarterly revenue for second-draw borrowers, and other required documentation to speed the process.

    AICPA executives will discuss the latest PPP developments and their implications for CPAs and their small business clients at this week’s AICPA Town Hall at 3 p.m. ET on Thursday.

    PPP funding, forms and guidance

    Accountants played a key role in helping small businesses secure needed funding during the first iteration of PPP, which provided $525 billion in forgivable loans over five months before it stopped accepting applications in August. The $284.5 billion in fresh PPP funding includes set-asides of $35 billion for first-time loans and $15 billion set aside for CFIs.

    The SBA and Treasury issued guidance Jan. 6 for the new PPP, which shares many of the same rules as the old PPP but also has some significant differences. Application forms for first- and second-draw loans were released a couple of days later.  

    Quick overview of the new PPP

    In general, first- and second-time PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs (with a cap per employee of $100,000 annualized) in 2019, 2020, or the year prior to the loan. PPP borrowers with North American Industry Classification System (NAICS) codes starting with 72 (such as hotels and restaurants) can receive up to 3.5 times their average monthly payroll costs on second-draw loans.

    The loans are capped at $10 million for first-time borrowers and $2 million for second-time PPP borrowers.

    PPP first- and second-draw loans may qualify for forgiveness if the funds are used on the following eligible costs: payroll, rent, covered mortgage interest, and utilities, covered worker protection and facility modification expenditures, covered property damage costs, covered payments to suppliers and payments for business software or cloud computing services that facilitate business operations, product or service delivery, and a number of back-office functions, including accounting.

    To be eligible for full loan forgiveness, PPP borrowers must spend no less than 60% of the funds on payroll over a covered period of their choice between eight and 24 weeks.

    Borrowers are eligible for a second-draw PPP loan of up to $2 million, provided they have:

    • 300 or fewer employees.
    • Used or will use the full amount of their first PPP loan on or before the expected date for the second PPP loan to be disbursed to the borrower. The IFR also clarifies that the borrower must have spent the full amount of the first PPP loan on eligible expenses.
    • Experienced a revenue reduction of 25% or more in all or part of 2020 compared with all or part of 2019. This is calculated by comparing gross receipts in any 2020 quarter with an applicable quarter in 2019, or, in a provision added in the IFR, a borrower that was in operation for all four quarters of 2019 can submit copies of its annual tax forms that show a reduction in annual receipts of 25% or greater in 2020 compared with 2019.

    First time PPP loans are available to borrowers that were in operations on Feb. 15, 2020 and are from one of the following groups:

    • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
    • Sole proprietors, independent contractors, and eligible self-employed individuals.
    • Not-for-profits, including churches.
    • Accommodation and food services operations with NAICS codes starting with 72 that have fewer than 500 employees per physical location.
    • Sec. 501(c)(6) business leagues, such as chambers of commerce, visitors’ bureaus, etc., and “destination marketing organizations” that have 300 or fewer employees and do not receive more than 15% of receipts from lobbying. The lobbying activities must comprise no more than 15% of the organization’s total activities and have cost no more than $1 million during the most recent tax year that ended prior to Feb. 15. 2020. Sports leagues are not eligible.
    • News organizations that are majority-owned or controlled by an NAICS code 511110 or 5151 business or not-for-profit public broadcasting entities with a trade or business under NAICS code 511110 or 5151. The size limit for this category is no more than 500 employees per location.

    AICPA experts discuss the latest on the PPP and other small business aid programs during a biweekly virtual town hall. The webcasts, which provide CPE credit, are free to AICPA members. Go to the AICPA Town Hall Series webpage for more information and to register.

    The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

    For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.

    — Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.


  • 01/14/2021 10:20 AM | Anonymous member (Administrator)

    January 14, 2021

    WASHINGTON – The U.S. Small Business Administration, in consultation with the U.S. Treasury Department, will re-open the Paycheck Protection Program (PPP) loan portal to PPP-eligible lenders with $1 billion or less in assets for First and Second Draw applications on Friday, January 15, 2021 at 9 a.m. EST. The portal will fully open on Tuesday, January 19, 2021 to all participating PPP lenders to submit First and Second Draw loan applications to SBA.

    Earlier in the week, SBA granted dedicated PPP access to Community Financial Institutions (CFIs) which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries as part of the agency’s ongoing efforts to reach underserved and minority small businesses.

    On Friday, SBA will continue its emphasis on reaching smaller lenders and businesses by opening to approximately 5,000 more lenders, including community banks, credit unions, and farm credit institutions.  Moreover, the agency also plans to have dedicated service hours for these smaller lenders after the portal fully re-opens next week.

    “A second round of PPP could not have come at a better time, and the SBA is making every effort to ensure small businesses have the emergency financial support they need to continuing weathering this time of uncertainty,” said SBA Administrator Jovita Carranza. “SBA has worked expeditiously to ensure our policies and systems are re-launched so that this vital small business aid helps communities hardest hit by the pandemic. I strongly encourage America’s entrepreneurs needing financial assistance to apply for a First or Second Draw PPP loan.”

    “We are pleased to have opened PPP loans to CDFIs, MDIs, CDCs, and Microloan Intermediaries.  The PPP is already providing America’s small businesses hardest hit by the pandemic with vital economic relief,” said Secretary of the Treasury Steven T. Mnuchin. “As the Program re-opens for all First and Second Draw borrowers next week, the PPP will allow small businesses to keep workers on payroll and connected to their health insurance.”

    First Draw PPP Loans are for those borrowers who have not received a PPP loan before August 8, 2020. The first round of the PPP, which ran from March to August 2020, was a historic success helping 5.2 million small businesses keep 51 million American workers employed.  

    Second Draw PPP Loans are for eligible small businesses with 300 employees or less, that previously received a First Draw PPP Loan and will use or have used the full amount only for authorized uses, and that can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. The maximum amount of a Second Draw PPP loan is $2 million. 

    Updated PPP Lender forms, guidance, and resources are available at www.sba.gov/ppp and www.treasury.gov/cares.

    ###

    About the U.S. Small Business Administration

    The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov


  • 01/13/2021 10:31 AM | Anonymous member (Administrator)

    January 13, 2021

    The AICPA expects the federal government to open up the application process for all lenders participating in the latest round of the Paycheck Protection Program by Friday, and encourages CPA firms to advance the application process for small business clients seeking relief.

    The Small Business Administration (SBA) began accepting new applications on a limited basis this week through community financial institutions. But confusion about the timing for other lenders has led to anxiety among small businesses and their advisers.

    “We believe the full program needs to go live as soon as possible and we fully support the Treasury Department and SBA reopening the program for all lenders by Friday,” said AICPA President and CEO Barry Melancon, CPA, CGMA. “What we’ve been telling CPA firms is be prepared and get to work. All indications, based on input from the Treasury and SBA, is there will be enough funding to meet all of the ‘first draw’ and ‘second draw’ PPP applications, so firms can help alleviate concerns their clients may have.”

    The AICPA has been advising firms to collect key information from their clients such as average monthly payroll amounts, quarterly revenue comparisons for second-draw borrowers, and other required documentation to speed the process. Compared to the initial launch of the program in April 2020, firms now have substantial experience in business relief, more guidance, and better tools.

    The AICPA, CPA.com, and fintech company Biz2Credit in September launched a financing platform for CPA firms, the CPA Business Funding Portal, to help practitioners as they assist small businesses through PPP loan forgiveness. The portal, which has been used by thousands of firms, has been updated to accept so-called PPP2 applications and over 3,000 applications have already been prepopulated.

    “Small businesses should expect more scrutiny in this round of PPP applications,” said Erik Asgeirsson, president and CEO of CPA.com, the AICPA’s business subsidiary. “The SBA is doing more vetting for potential fraud and in some instances is asking for more validation. It’s important that businesses and their advisers get it right, so that applications don’t get held up and pushed back in the queue. That’s why we think it’s vital that firms use the more robust set of tools that are available now.”

    The CPA Business Funding Portal offers a free basic service, plus tiered subscription plans for firms that want a direct path to fund loans through an SBA-approved lender to ensure they receive agent fees.

    “It is critical that business owners work closely with their trusted business advisers, especially their CPA, to ensure they qualify for the maximum loan amount and provide the right supporting documentation,” said Rohit Arora, CEO and Co-Founder of Biz2Credit. “Being prepared now is the best way for businesses to ensure they get the money they need.”

    AICPA executives will discuss the latest PPP developments and their implications for CPAs and their small business clients at this week’s AICPA Town Hall at 3 p.m. ET on Thursday. For more information about the AICPA’s resources for firms on PPP, please visit aicpa.org/sba. More details about the CPA Business Funding Portal can be found at cpa.com/business-funding.

  • 01/07/2021 8:35 AM | Anonymous member (Administrator)

    January, 7 2021

    By Jeff Drew

    The U.S. Small Business Administration (SBA) and Treasury issued guidance late Wednesday night for the reconstituted Paycheck Protection Program (PPP).

    The guidance came in the form of two interim final rules (IFRs).

    • The 82-page IFR “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended” consolidates the rules for PPP forgivable loans for first-time borrowers and outlines changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, P.L. 116-260).
    • The 42-page IFR “Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans” lays out the guidelines for new PPP loans to businesses that previously received a PPP loan.

    The AICPA will provide a detailed review of the new guidance in a virtual Town Hall today at 3 p.m. ET. The webcast is available for free to AICPA members.

    The JofA will update this article with details about the new PPP guidance later this morning. Following is a summary of the new program as described in the Economic Aid Act.

    PPP2 overview

    Congress revived the PPP as part of the $900 billion COVID-19 relief bill that was signed into law on Dec. 27. The program provided $525 billion in forgivable loans over five months before it stopped accepting applications in August. The Economic Aid Act rebooted PPP (or PPP2, as some call it) with many of the same parameters as the first program but also several important differences from the original PPP.

    One of the biggest changes is making PPP funding available to businesses that previously received a PPP loan. Business are eligible for a second PPP loan of up to $2 million, provided they have 300 or fewer employees, have used or will use the full amount of their first PPP loan, and can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.

    Fresh PPP loans also are available to first-time borrowers from the following groups:

    • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
    • Sole proprietors, independent contractors, and eligible self-employed individuals.
    • Not-for-profits, including churches.
    • Accommodation and food services operations (those with North American Industry Classification System (NAICS) codes starting with 72) with fewer than 300 employees per physical location.

    The legislation also allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.

    PPP loan terms

    As with PPP1, the costs eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest, and utilities. PPP2 also makes the following potentially forgivable:

    • Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
    • Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
    • Covered operating costs such as software and cloud computing services and accounting needs.

    To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks — the same parameters PPP1 had when it stopped accepting applications in August.

    PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, the same as with PPP1, but the maximum loan amount has been cut from $10 million in the first round to the previously mentioned $2 million maximum. PPP borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum.

    Simplified application and other terms of note

    The new COVID-19 relief bill also:

    • Creates a simplified forgiveness application process for loans of $150,000 or less. Specifically, a borrower shall receive forgiveness if the borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. The SBA must create the simplified application form within 24 days of the bill’s enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements. Borrowers are required to retain relevant records related to employment for four years and other records for three years, as the SBA may review and audit these loans to check for fraud.
    • Repeals the requirement that PPP borrowers deduct the amount of any Economic Injury Disaster Loan advance from their PPP forgiveness amount.
    • Includes set-asides to support first- and second-time PPP borrowers with 10 or fewer employees, first-time PPP borrowers that have recently been made eligible, and for loans made by community lenders.

    AICPA experts discuss the latest on the PPP and other small business aid programs during a biweekly virtual town hall. The webcasts, which provide CPE credit, are free to AICPA members. Go to the AICPA Town Hall Series webpage for more information and to register.

    The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.


  • 12/22/2020 8:12 AM | Anonymous member (Administrator)

    Shutterstock_1489697975We need to practice self-care now more than ever — in the face of an unprecedented crisis, surrounded by the unknown. Even without the pandemic adding stress to our lives, anxiety, sadness and self-doubt can affect us at any time. May is Mental Health Awareness Month, making this an ideal opportunity to learn how to manage your feelings with patience and kindness.

    Whether it’s taking moments to acknowledge how you feel in times of turmoil, using your senses to create calm for yourself while working from home or adapting to the changing expectations of your job, there are many simple steps you can take to promote your physical and mental well-being. We’ve compiled the following resources to help you get started:

    Permission to be selfish. Even if you can’t take a typical vacation, you need to take some time off and prioritize your needs and wants. By managing a healthy recovery, you’ll become a better coworker, friend and family member.  

    Stress-busting senses. Our five senses can do more than their expected external duties — they can help us find internal balance, too.

    Accept the changing situation. The world may seem like it’s upside down now, but you can still create stability for yourself. Here are tips on how to reduce anxiety and isolation.   

    Managing WFH. You’ve suddenly found yourself working from home, and it’s a lot to take in. Whether it’s the isolation that gets to you or the pressure to parent while working, here are some insights to help you manage.

    Productivity hacks. Streamlining your approach to work helps you become more productive, increases your focus and reduces stress.

    Self-care every day. Don’t leave it for when you’re drowning underneath the stress of work and expectations — carve out some time for self-care every day. We break down the what and how.

    Healthy stomach, healthy mind. When you’re busy, you tend to choose food for convenience rather than health. But your food choices have lasting effects — why not make them positive?

    Choose to improve. Thriving means evolving with the times. Come up with resolutions to become more effective —whether at work, at home or in your downtime.

    Lead with support. If you’re a manager, you may be seeing some of your employees struggle with stress. Here’s how you can help.

    Thrive and be well. You can make the choice not just to prioritize wellness, but to thrive in your environment. Try these two proven methods.

    Separate work and self. Compartmentalizing work, how work makes us feel and the need for downtime can be stressful. This is where mindfulness comes in to help you create a healthy working environment.

    Mindfulness matters. Busy season can take a lot out of a person, but our six-part podcast shows you there are ways to reorient yourself to find mental peace among the distractions.

    Making the time to step back and take a deep breath can work wonders for your mind, body and spirit. When work anxiety and the weight of expectations seem too much, remember that you can take positive actions and be kind to yourself. It may be the final day of Mental Health Awareness Month, but our efforts to support you will continue year round.

    Association Staff

    Posted by AICPA Communications on May 31, 2020 in Human Intelligence

  • 12/22/2020 7:24 AM | Anonymous member (Administrator)

    December 21, 2020

    By Jeff Drew

    The U.S. Senate and House of Representatives overwhelmingly passed a $900 billion COVID-19 relief bill Monday night that provides $600 stimulus payments to individuals, adds $300 to extended weekly unemployment benefits, and provides more than $300 billion in aid for small businesses.

    The legislation, the Consolidated Appropriations Act, 2021, also ensures tax deductibility for business expenses paid with forgiven Paycheck Protection Program (PPP) loans, provides fresh PPP funding, makes Sec. 501(c)(6) not-for-profit organizations eligible for loans for the first time, and offers businesses facing severe revenue reductions the opportunity to apply for a second loan.

    The Senate approved the bill with a 92-6 vote at about 11:45 p.m. Monday, just a couple of hours after the House approved it 359-53. The measure now goes to President Donald Trump, who is expected to sign it into law.

    The COVID-19 relief package is tied to a $1.4 trillion resolution to fund the government through September 2021.

    Key provisions in the bill include:

    • $325 billion in aid for small businesses struggling after nine months of pandemic-induced economic hardships. The bill provides more than $284 billion to the U.S. Small Business Association (SBA) for first and second PPP forgivable small business loans and allocates $20 billion to provide Economic Injury Disaster Loan (EIDL) Grants to businesses in low-income communities. In addition, shuttered live venues, independent movie theaters, and cultural institutions will have access to $15 billion in dedicated funding while $12 billion will be set aside to help business in low-income and minority communities.
    • $166 billion for economic impact payments of $600 for individuals making up to $75,000 per year and $1,200 for married couples making up to $150,000 per year, as well as a $600 payment for each child dependent.
    • $120 billion to provide workers receiving unemployment benefits a $300 per week supplement from Dec. 26 until March 14, 2021. This bill also extends the Pandemic Unemployment Assistance (PUA) program, with expanded coverage to the self-employed, gig workers, and others in nontraditional employment, and the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides additional weeks of federally funded unemployment benefits to individuals who exhaust their regular state benefits.
    • $25 billion in emergency rental aid and an extension of the national eviction moratorium through Jan. 31, 2021.
    • $45 billion in transportation funding, including $16 billion for airlines, $14 billion for transit systems, $10 billion for state highways, $2 billion each for airports and intercity buses, and $1 billion for Amtrak.
    • $82 billion in funding for colleges and schools, including support for HVAC repair and replacement to mitigate virus transmission, and $10 billion in child care assistance.  
    • $22 billion for health-related expenses incurred by state, local, Tribal, and territorial governments.
    • $13 billion for emergency food assistance, including a 15% increase for six months in Supplemental Nutrition Assistance Program benefits.
    • $7 billion for broadband expansion.

    The bill also extends the employee retention tax credit and several expiring tax provisions and temporarily allows a 100% business expense deduction for meals (rather than the current 50%) as long as the expense is for food or beverages provided by a restaurant. This provision is effective for expenses incurred after Dec. 31, 2020, and expires at the end of 2022.

    Breaking down the PPP provisions

    The return of the PPP is of particular interest to accountants, who played a significant role in helping millions of small businesses acquire $525 billion in forgivable loans during the five months the program was accepting applications, according to SBA reporting. The new round of PPP, or PPP2 as some are calling it, contains many similarities to the first round of the PPP but also has several important differences. The following is a high-level view of the PPP provisions.

    Who is eligible to apply

    PPP2 loans will be available to first-time qualified borrowers and, for the first time, to businesses that previously received a PPP loan. Specifically, previous PPP recipients may apply for another loan of up to $2 million, provided they:

    • Have 300 or fewer employees.
    • Have used or will use the full amount of their first PPP loan.
    • Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.

    PPP2 also makes the forgivable loans available to Sec. 501(c)(6) business leagues, such as chambers of commerce, visitors’ bureaus, etc., and “destination marketing organizations” (as defined in the act), provided they have 300 or fewer employees and do not receive more than 15% of receipts from lobbying. The lobbying activities must comprise no more than 15% of the organization’s total activities and have cost no more than $1 million during the most recent tax year that ended prior to Feb. 15, 2020.  

    PPP2 will also permit first-time borrowers from the following groups:

    • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
    • Sole proprietors, independent contractors, and eligible self-employed individuals.
    • Not-for-profits, including churches.
    • Accommodation and food services operations (those with North American Industry Classification System (NAICS) codes starting with 72) with fewer than 300 employees per physical location.

    The bill allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.

    PPP loan terms

    As with PPP1, the costs eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest, and utilities. PPP2 also makes the following potentially forgivable: 

    • Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
    • Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
    • Covered operating costs such as software and cloud computing services and accounting needs.

    To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks — the same parameters PPP1 had when it stopped accepting applications in August.

    PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, the same as with PPP1, but the maximum loan amount has been cut from $10 million in the first round to the previously mentioned $2 million maximum. PPP borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum.

    Simplified application and other terms of note

    The new COVID-19 relief bill also:

    • Creates a simplified forgiveness application process for loans of $150,000 or less. Specifically, a borrower shall receive forgiveness if a borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. The SBA must create the simplified application form within 24 days of the bill’s enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements. Borrowers are required to retain relevant records related to employment for four years and other records for three years, as the SBA may review and audit these loans to check for fraud.
    • Repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount.
    • Includes set-asides to support first- and second-time PPP borrowers with 10 or fewer employees, first-time PPP borrowers that have recently been made eligible, and for loans made by community lenders.

    Tax deductibility for PPP expenses

    The bill also specifies that business expenses paid with forgiven PPP loans are tax-deductible. This supersedes IRS guidance that such expenses could not be deducted and brings the policy in line with what the AICPA and hundreds of other business associations have argued was Congress’s intent when it created the original PPP as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136 (see the Dec. 3 letter from the AICPA and state societies to congressional leaders).

    The COVID-19 relief bill clarifies that “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided” by Section 1106 of the CARES Act (which has been redesignated as Section 7A of the Small Business Act). This provision applies to loans under both the original PPP and subsequent PPP loans.

    While the CARES Act excluded PPP loan forgiveness from gross income, it did not specifically address whether the expenses used to achieve that loan forgiveness would continue to be deductible, even though they would otherwise be deductible. In April, the IRS issued Notice 2020-32, which stated that no deduction would be allowed under the Internal Revenue Code for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a PPP loan because the income associated with the forgiveness is excluded from gross income for purposes of the Code under CARES Act Section 1106(i).

    In November, the IRS then expanded on this position by issuing Rev. Rul. 2020-27, which held that a taxpayer computing taxable income on the basis of a calendar year could not deduct eligible expenses in its 2020 tax year if, at the end of the tax year, the taxpayer had a reasonable expectation of reimbursement in the form of loan forgiveness on the basis of eligible expenses paid or incurred during the covered period. Treasury Secretary Steven Mnuchin also argued against businesses being able to deduct business expenses paid with forgiven, tax-free PPP funds, calling it an unwarranted double benefit for businesses.  

    The AICPA disputed this interpretation of the CARES Act loan forgiveness rules, arguing that it was not Congress’s intent to disallow the deduction of otherwise deductible expenses. Congress has now agreed with that position.

    AICPA experts discuss the latest on the PPP and other small business aid programs during a biweekly virtual town hall. The webcasts, which provide CPE credit, are free to AICPA members. Go to the AICPA Town Hall Series webpage for more information and to register. A special edition town hall will be recorded this week to review the provisions of the stimulus bill. Look for the recording Wednesday on AICPATV.

    The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

    For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.

    — Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.


  • 12/15/2020 4:10 PM | Anonymous member (Administrator)

    December 11, 2020

    Hosted by Paul Bonner

    Eileen Sherr, CPA, CGMA, MT, director of the AICPA’s Tax Policy & Advocacy team in Washington, D.C., discusses recent IRS guidance regarding the tax treatment of loans under the U.S. Small Business Administration’s Paycheck Protection Program (PPP). This guidance holds that the amount of a PPP loan that is forgiven under the SBA’s procedures is not included in the loan recipient taxpayer’s gross income, but any expenses used to qualify for the forgiveness cannot be deducted on the taxpayer’s income tax return as an ordinary and necessary business expense. We also look ahead to what the change in presidential administration in 2021 might spell for a broad range of taxpayers.

    What you’ll learn from this episode:

    • How PPP loan forgiveness is excluded from taxpayers’ gross income for income tax purposes, but the IRS regards related business expenses as nondeductible.
    • The progress of efforts by members of Congress to clarify in new legislation that the PPP forgiveness-related expenses are intended to be deductible as ordinary and necessary expenses of loan recipients.
    • What form advocacy on this issue by the AICPA and its members is taking.
    • How and when tax law changes proposed by the Joe Biden–Kamala Harris presidential campaign might be reflected in a proposed budget by the Biden administration.

    Play the episode below or read the edited transcript:


    For more news and reporting on the coronavirus and how CPAs can handle challenges related to the pandemic, visit the 
    JofA’s coronavirus resources page.

    To comment on this podcast or to suggest an idea for another podcast, contact Paul Bonner, a JofA senior editor, at Paul.Bonner@aicpa-cima.com.

    Transcript:

    Paul Bonner: Hello, and welcome to the JofA podcast. Today, we’re talking with Eileen Sherr from the AICPA’s Washington office. She is director of Tax Policy and Advocacy for the AICPA and will bring us up to speed on the AICPA’s priorities in advocating for members and their clients. One important priority we’ll cover is the tax treatment of loans and their forgiveness under the Paycheck Protection Program, or PPP, which was enacted during 2020 as part of the Coronavirus Aid, Relief, and Economic Security, or CARES, Act.

    Hello, Eileen, and thanks for joining us again.

    Eileen Sherr: Hello. Good afternoon.

    Bonner: I should perhaps start out by saying congratulations on your new title of director of Tax Policy and Advocacy.

    Sherr: Thank you. I’m happy to be a director.

    Bonner: Yes. We’ve talked before about state tax issues, state and local taxation, and today we’d like to talk about these federal tax issues, particularly pertaining to the PPP program and loans that have been forgiven, which I imagine is most of them that have been given out. The applicants have applied for loan forgiveness, and in many or most cases, I imagine, received it, although there are some split-year considerations we want to get to a little bit later. The PPP program, of course, is administered by the Small Business Administration and provides these forgivable loans to businesses based on their number of employees and other expenses that they maintain during the covered period. And the loan forgiveness is also calculated based on some of these expenses that they’ve had.

    Now, the difficulty arises, as you know, with Notice 2020-32 that came out earlier, advising, from the IRS, that these expenses that are used in loan forgiveness are not then deductible as ordinary and necessary business expenses, which would be a double deduction, in essence, they’re saying, right?

    Sherr: Correct. Basically, Notice 2020-32 came out, and it was good in that it said that the forgiveness was not taxable, so that was good confirmation on that, but it did say, on the negative side, that the expenses related to the forgivable loans are ineligible for tax deductions, that you get the nontax treatment — you don’t get taxed on the forgiveness, but you also do not get to deduct any business expenses paid with the forgivable loans.

    Bonner: That does have a certain degree of logic to it, I suppose, although one could say that the intent of Congress was to provide a benefit here for which that tax principle would not apply. What’s the AICPA’s position on this issue?

    Sherr: Correct. The AICPA has sent in letters to Congress saying that we understand the congressional intent of the PPP legislation was to allow both the nontaxable treatment of the forgiveness and also tax business expenses — we think Congress intended to make those deductible as well.

    Bonner: Does Congress agree with that reading of its intent?

    Sherr: Yes, they haven’t acted quite yet, but it was in the HEROES bill [Health and Economic Recovery Omnibus Emergency Solutions Act, H.R. 6800]; the bill that House Democrats passed for the next round of stimulus did include deductibility for PPP expenses. Expenses that you use your loan forgiveness for would be deductible under the House-passed Democratic bill. Both their bigger bill and their skinnier version had that in it, so we’re happy to see that it was in what passed the House, and also there is bipartisan support in the Congress for this. There’s three bills that are out there: S. 3612, H.R. 6821, and H.R. 6754. All would allow deductibility for the expenses that you are getting PPP loan forgiveness for, as well.

    Bonner: And I believe that the AICPA is asking all of its members to write to their congresspersons, and that everybody should do this to try to get Congress to express this through legislation and make it clear that these expenses are deductible, is that correct?

    Sherr: That is correct; yes, we are sending — I think today, actually — we are sending something out to the AICPA membership urging everybody to contact their member of Congress about it. We’re hoping that in the lame duck session that they can move forward with it.

    Bonner: Now, I imagine that the lame duck session has lots of competing priorities of things they could be taking up. Is it really likely to expect to see movement on these proposals, and if they don’t get to it before adjournment, will it be moot next year?

    Sherr: Yes, we do not have much time left. We have about, probably, three weeks after they come back after Thanksgiving to deal with any legislation. The defense authorization bill has to go through. The funding for the government ends Dec. 11 unless they pass a continuing resolution or appropriations bills, or both. So, that’s going to be a priority, and then we’re really hoping that they do take up some more coronavirus pandemic relief. I know the state governments would like them to include something in there and lots of other provisions, and we are really hopeful and trying to work it that this would be included in such a package. If they can negotiate — and obviously, getting anything through Congress is challenging, especially in a few weeks. But they seem to like deadlines, so we’re hopeful that before they adjourn that they would include this in the bill that would include some pandemic relief.

    Bonner: I have to imagine there will be at least an attempt for another relief bill, right?

    Sherr: Yes, definitely. We are hopeful. The House has passed it; they’re really trying to move forward with it. I think it’s just some sticking points on the amount and how generous the bill will be. We’ll see.

    Bonner: You mentioned the skinny HEROES Act; I heard mention the other day of the skinny HEALS [Health, Economic Assistance, Liability Protection and Schools Act], and I had to think about what that meant.

    Sherr: Yes. The HEALS is the Senate Republican bill, and the HEROES is the House Democrat proposal, and they just need to come together on some things.

    Bonner: Right, they’re just skinny in different ways, aren’t they?

    Sherr: They always start with the biggest, the best offer, and then they kind of negotiate down. It’s just the negotiation versions.

    Bonner: Right, and then the two chambers have to negotiate with each other, I suppose.

    Sherr: Yes, to get a conference agreement.

    Bonner: Yeah. So, we could see perhaps one of these bills you mentioned passing, and we could see further aid similar to the PPP program or maybe even an extension of it for more new loans. I don’t think they spent all their authorized money in the first place, right?

    Sherr: Right. But we’re hopeful that there will be some more PPP, a phase 2 of the PPP loans, and as more businesses need more help, they would offer it. And that they would add in some more simplified processes for getting the forgiveness, and they would add in 501(c)(6) organizations into the PPP — that would help with state [CPA] societies. And also that maybe they would have a simplified process for getting the forgiveness; I think right now they have $50,000 [maximum eligible loan amount], and I think they’re talking about a $150,000 possibility for the simplified process. Those are all things that are being considered.

    Bonner: I looked the other day when you mentioned the 501(c)(6) organizations; I thought, how many are there? There are 29 of them; did you know that? Twenty-nine paragraphs under Sec. 501(c), and I imagine all of them would like to be able to participate in PPP. I think it’s the 501(c)(3)s, primarily, right now.

    Sherr: We’re looking at the (c)(6)s in particular; that would help state societies.

    Bonner: Those are business leagues and similar organizations, trade organizations, I think.

    Sherr: Yes.

    Bonner: Now, it’s been hypothesized until fairly recently, what happens for this PPP loan forgiveness and deductibility of expenses where you have a PPP loan granted in 2020, and Dec. 31 comes, and it’s not forgiven. But then later, in 2021, the same loan is forgiven. Maybe the taxpayer has already deducted those expenses, since one tax year stands on its own, doesn’t it? What happens then?

    Sherr: Well, the IRS just came out last week — I think it was Wednesday night at 7 p.m. — they came out with two releases, IRS Rev. Rul. 2020-27, and IRS Rev. Proc. 2020-51. Rev. Rul. 2020-27 says that if there’s a reasonable expectation of forgiveness, you are not allowed to deduct it, even if you have not yet submitted your loan forgiveness application or you have not yet received approval of your forgiveness application by the end of the taxable year. So, if you’re planning to apply for forgiveness, you are not allowed to deduct it, according to IRS.

    Bonner: “If you’re planning to apply for forgiveness,” you say. Well, I can plan to do a lot of things and they might not come to pass, right? I could make a mistake on my forgiveness application, couldn’t I, that would be fatal to that application. I could realize that I was never authorized to apply for forgiveness for one reason or another. Anything could happen that would wreck that reasonable expectation. What would the IRS do in that instance?

    Sherr: That’s why they have Rev. Proc. 2020-51, which gives a safe harbor. It says that if some or all of the loan is not forgiven, then you can deduct those expenses up to the principal amount that is not forgiven. And you can deduct it either on the original 2020 return — so if you find out before you file your 2020 return, then you can deduct it right then and there, or you can amend, if you find out after you’ve already filed that you do not get the forgiveness, then you can amend your 2020 return and deduct those expenses, up to the amount that was not forgiven. Or, in 2021 you can take those business expenses and deduct them. And when you’re filing those returns, you need to include a Rev. Proc. 2020-51 statement that gives some information about the loan.

    Bonner: I see. You know, it reminds me of certain situations where the one-tax-year-standing-on-its-own principle comes into play, and that is when one had a reasonable expectation. We see this all the time in disaster loss deductions, for example, when you no longer had a reasonable expectation of repayment through insurance or otherwise, for example. I imagine it could happen the IRS would raise the issue of when you had a reasonable expectation. If it wasn’t until after the end of 2020, is the safe harbor still available? It looks like a problem to me.

    Sherr: I think it is, I think the safe harbor’s there for when you find out about your forgiveness. If you find out you did not get the forgiveness, then they’re allowing you to take it and to amend returns. I think the best advice for people is to wait and see what Congress does and if it does allow the deductibility. Wait till March and April next year, so you have a few more months to think about things and see what Congress does before you decide if you’re going to deduct it or not. Also, by then you will, hopefully, have received your forgiveness, and, hopefully, SBA will have confirmed that you have gotten the forgiveness. I would just say, put things off as long as you can, till we know the lay of the land with deductibility, with Congress providing it, or if you find out about your forgiveness from SBA.

    Bonner: Yes, we do have some time before 2020 returns are due, I suppose.

    But there’s going to be a lot changed in the years ahead, aren’t there, not just 2021, but with a new administration — God and the Electoral College willing — a lot could be different, too. And not only businesses but individuals, estates and trusts, corporations, everybody has to think about how tax policy might change going forward. And there could be new legislation. I’ve heard some talk already of harvesting capital gains in 2020 to take advantage of the rates now, versus what they might be next year or later. How do you assess — what’s in your crystal ball right now?

    Sherr: Obviously, with a new administration, we always get new proposals. Usually around February, the administration releases their budget proposals, and that’s going to be the beginning of what the new administration would like to see for revenue for the year and for different budget things. And usually, for tax provisions that are proposed, we’ll find out more details then. Right now, we just are working off what was in the campaign and various different proposals there. It’s possible that things could change, especially with the virus and having to fund different things; we’ll have to see. It’s possible the corporate tax rate could change from 21% to 28%. I also want to mention that the TCJA [the law known as the Tax Cuts and Jobs Act, P.L. 115-97] provisions, a lot of them, the individual ones, will expire at the end of 2025, so things will change at that point unless Congress acts. So we’ll have to watch that.

    Going back to the administration proposals, there was also a 21% minimum tax on all foreign earnings of U.S. companies that’s been proposed and a tax penalty for companies who shift jobs overseas. There’s been talk of a 15% minimum tax on book income, but we really don’t know the details on that. There’s been talk of — basically only the high-income individuals, and what they defined during the campaign as $400,000 or more, so it really just affects the really high-income people — would see the marginal tax rate go up to 39.6%, like what we had under prior administrations. The individual capital gains rate would increase for those over $1 million. They’re really just trying to target the high-income individuals.

    There are some tax cuts that we’ve heard about as well, that there would be increased tax credits to afford health insurance, there would be an increased child care tax credit, and then an increased child tax credit, and then a $15,000 first-time homebuyer’s credit. So, there’s some good and some bad that’s been suggested.

    There may be an elimination of like-kind exchanges — that’s been proposed — and reducing the GILTI [global intangible low-taxed income] deduction from 50% to 25% of the income. So those are some things that have been out there listed. Also, treating capital gains as normal income for investors, again, over $1 million. So, that would be changing that for the millionaires. And a Social Security payroll tax for income over $400,000, and I think that’s been called a doughnut. Basically, right now, Social Security taxes go up to $137,500, I think [$137,700 for 2020 and $142,800 for 2021], and then there wouldn’t be any tax until $400,000, and they would start taxing again over $400,000.

    Bonner: My goodness. That would be a lot. You know, 2017 was billed as an epochal tax reform, and it boggles the imagination to have another one so soon.

    Sherr: We’ll have to see. With the Senate race, we’ll have to see what happens in early January with the Georgia runoffs there, and that’s really going to depend on whether anything’s going to move or not this year, whether it could be gridlock again or if there will be legislation. Stay tuned.

    Bonner: All right, we’ll stay tuned for that. And meanwhile, if you’re an AICPA member, you would tell them what?

    Sherr: Basically, listen to our updates, and we’ll keep you advised on what’s going on, what’s being proposed, and the AICPA Tax Section will be definitely giving out updates as things happen. And our AICPA Tax Policy and Advocacy group will be advocating on these issues. We have various committees and technical resource panels that will be studying and analyzing these proposals, and we’ll be commenting and giving insight to Congress on them.

    Bonner: OK. Well, thank you very much, Eileen, and we’ll talk again soon, I’m sure.

    Sherr: Definitely; nice talking to you, Paul.


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