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Old 11-22-2020, 10:40 AM
  #1641  
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Has anyone else who filed the forgiveness application been required to provide their 2019 k-1 or equivalent to show compensation to 5%+ owners for 2019? This was requested by our Ppp lender, Amex.

Our owners do not take salary, so our annual income from business doesn’t show up on our payroll accounts. We didnt include any owner comp in calculating our loan qualification amount, and 100% of our ppp loan proceeds went to payroll costs of non owners.

I fail to see why they want our owners income If none was used to either size loan (over $150k but less than $2mm) initially or included as use for loan proceeds.

I have a call into our accountants to get their advice, but wondering if anyone on here has dealt with this issue. My view is because there is no limitation on loan or forgiveness based on business profitability, there is no reason why we should provide this owner income data to lender.....and why should income from 2019 (pre Covid) be remotely applicable for a loan to help during The post Covid period.
Old 11-22-2020, 11:17 AM
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Originally Posted by txhedg View Post
Has anyone else who filed the forgiveness application been required to provide their 2019 k-1 or equivalent to show compensation to 5%+ owners for 2019? This was requested by our Ppp lender, Amex.

Our owners do not take salary, so our annual income from business doesn’t show up on our payroll accounts. We didnt include any owner comp in calculating our loan qualification amount, and 100% of our ppp loan proceeds went to payroll costs of non owners.

I fail to see why they want our owners income If none was used to either size loan (over $150k but less than $2mm) initially or included as use for loan proceeds.

I have a call into our accountants to get their advice, but wondering if anyone on here has dealt with this issue. My view is because there is no limitation on loan or forgiveness based on business profitability, there is no reason why we should provide this owner income data to lender.....and why should income from 2019 (pre Covid) be remotely applicable for a loan to help during The post Covid period.
We too went through Amex so this is news to me but we haven't started the process yet. We do take a salary mostly to cover taxes.
Old 11-22-2020, 12:18 PM
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Even if the payment becomes taxable (which is essentially what it means if the expenses that the PPP are used for become non-deductable), getting the PPP was a good thing (I can't understand how one could say it's not).

Our accountant is saying the oppopsite, pay/withold taxes in 2020 as if the IRS position stands. If it changes, great, if it doesn't there may be a penalty for not witholding enough taxes this year.
Old 11-22-2020, 12:47 PM
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Originally Posted by CORALREEFER View Post
I'm hearing almost the exact same thing from my CPA, she is advising a (wait and see) attitude.
Im getting the same advice here. Sitting on a 36k PPP loan.

Not sure how the higher dollar club will fair.
Old 11-22-2020, 12:49 PM
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Originally Posted by ericinmich View Post
Even if the payment becomes taxable (which is essentially what it means if the expenses that the PPP are used for become non-deductable), getting the PPP was a good thing (I can't understand how one could say it's not).

Our accountant is saying the oppopsite, pay/withold taxes in 2020 as if the IRS position stands. If it changes, great, if it doesn't there may be a penalty for not witholding enough taxes this year.
The PPP money being taxable would be much more expensive than not being to deduct some things, no?
Old 11-22-2020, 01:20 PM
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Originally Posted by David2 View Post
The PPP money being taxable would be much more expensive than not being to deduct some things, no?
The net income of the business would be the same. If the PPP goes in the count of business income, and you get the equivelent payroll deduction would be the same as the PPP doesn't count as income, but you don't get to deduction the payroll amount it was used for.

This is how my accountant has described it.
Old 11-22-2020, 02:02 PM
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Originally Posted by ericinmich View Post
The net income of the business would be the same. If the PPP goes in the count of business income, and you get the equivelent payroll deduction would be the same as the PPP doesn't count as income, but you don't get to deduction the payroll amount it was used for.

This is how my accountant has described it.
Let’s hope nobody gets the idea to make it taxable then.
Old 11-22-2020, 02:26 PM
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Originally Posted by David2 View Post
Let’s hope nobody gets the idea to make it taxable then.
Not sure what you mean? It is essentally taxible...

Not a chance that the PPP would be taxable and that you couldn't count the expense.. the net is the same.
Old 11-22-2020, 08:17 PM
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Originally Posted by ericinmich View Post
Not sure what you mean? It is essentally taxible...

Not a chance that the PPP would be taxable and that you couldn't count the expense.. the net is the same.
With the new administration anything is possible. It might be a separate tax and all of the proceeds given to the homeless!
Old 11-23-2020, 05:19 AM
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The IRS has strongly taken the position that your 2020 taxable income will be higher than otherwise it would be equal to the amount of PPP Forgiveness.

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