Page 14 - Layout 1

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