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COVID-19
          PANDEMIC



        A Closer Look at PPP, EIDL


        and other relief programs



        By Jim Rice, CPA, and Christopher Davis, CPA




































          As we all try to deal with the COVID-19 crisis, several economic  given. Watch for additional information from your lender and the
        relief programs have gotten a lot of attention but still call for a  SBA on this required documentation. And be aware that the SBA
        closer look due to their complexity. Cases in point: The Paycheck  recently announced that it intends to review all forgiveness applica-
        Protection Program (PPP), the Small Business Administration’s  tions for loans over $2 million.
        Economic Injury Disaster Loan and Express Bridge Loan pro-
        grams. All of these demand careful handling. This article addresses  Tax deductibility
        some of the most important aspects of these and other programs.   It is also important to know that IRS Notice 2020-32 states that
                                                               expenses paid (wages, rent, utilities and mortgage interest) on any
        PAYCHECK PROTECTION PROGRAM                            PPP loan amount that is forgiven will not be deductible on the tax
          Many of us were able to get the Paycheck Protection Program  return. For many taxpayers, this seems to conflict with the intent
        (PPP) loan with the understanding that it could be forgiven if we  of the new laws – to help taxpayers deal with the crisis.
        continue to pay our employees their wages. The loan forgiveness is  The IRS essentially is saying you cannot deduct an expense you
        a very important financial benefit.                    did not pay for. There will be a lot of negative commentary on this
          The details on calculating exactly how much of the PPP loan will  IRS notice, but Internal Revenue Code Section 265 supports the
        be forgiven are still many weeks away. But we know that wages, rent,  IRS position. We shall see.
        utilities and certain mortgage interest payments that recipients pay
        out in the eight weeks immediately after receipt of the loan are the  Unemployment benefits
        key. Retention of full-time-equivalent employees is also part of the  For physicians and other medical staff who are being paid less
        calculation.                                           than normal, potential unemployment benefits starting at $600 per
          Many documents must be gathered for submission to the lender  week should be explored. Contact the Texas Workforce Commis-
        to inform their decision on how much of the PPP loan will be for-  sion immediately.


         14  San Antonio Medicine   •  June 2020
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