Im not getting your headline for this post?
A line from a Beatles song "The Taxman" - boomer music - not their best recording..
The program was pitched to us as being nontaxable. Time to bend over.......
Treasury screwed us on this. When PPP was launched we had a choice to apply for PPP or a payroll tax credit, you could NOT do both. Then, after we were committed to PPP they changed the rules! Even basic rules! Next tax year we will be facing a new liquidity crises and our banks will get hit as well. Great job on killing off the businesses in 2021 that managed to survive 2020
Theres really no screw, you currently cant double dip. Your not taxed on the forgiven amount. You just cant use the sums deducted (say payroll), against other earnings. Not an issue, if you were already taking other losses, like lost sales revenues or added deductions from SECTION 179 writeoffs.As congress most likely wont fix this until 2021, or NEVER if BIDEN wins, its best to plan a tax strategy to ensure the covered loan amount is overset by other tax strategies.Now, arent you glad you paid McDonalds full rent and service fees?! Im sure they are..
Well, there is a screw when you calculate your financial covenant ratios in your loans next year. That hit to cash flow from this year will come right to the forefront.I do agree that they won't address it until after the election, though. It's a next year problem, not immediate unless you are on the fence about applying for forgiveness versus keep a 1% loan that you hope to be able to pay back.
If youd be able to pay it back.. right? That opens the door to other government questions, why did you apply in the first place?Take the forgiveness, for even if you couldn't deduct the expenses. The tax rate is portional to the entire loan... so youd still come out ahead, just not as much.Hence a loan is 100% payback, plus interest. Forgiveness is the loan amount, based on your tax bracket... 38%. With McDonalds, youll always have reinvestment foor Section 179 writeoffs.
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