Is the forgiven portion taxable to my business? Is there a second round of funds for businesses?
President Trump signed the $900 billion COVID-19 relief bill on December 27th so now we have final guidance on the PPP program. The bill is 5,593 pages long so the accounting community is still reading and digesting it but here are a couple highlights that we can tell you:
Is the PPP forgiven portion taxable?
Congress made it official…..If you received a PPP loan and it is forgiven, then you do not have to pay tax on the money and you still get to deduct all your expenses. This is a WIN-WIN and the best of both worlds. Free money. (Well, nothing is free, right? But, that’s a topic for another day.) This was the intent of the program from Day 1 but IRS made Congress spell it out in a bill.
You can now apply for forgiveness with your bank. If your loan amount is less than $150,000, you can use the simplified form 3508S and if your loan amount is greater than $150,000 you will use Form 3508 or 3508EZ. Banks have been hesitant to accept loan applications for forgiveness to date because they were waiting for guidance from Congress. The relief bill offered up the guidance banks were needing.
Did the bill offer a second round of PPP money?
The short answer is yes BUT, your business has to show that it was adversely affected by COVID and experienced at least a 25% drop in sales from a comparable period last year. We have not received any information on how to apply or where to apply.
Click here for a more in depth look at the bill.
Blog by Kim Storen, EA – Tax Team Lead, Senior Tax Professional
Learn more about Kim and the rest of the Storen Financial team here.