Western CPE Blog
Breaking tax and accounting news and analysis from the experts at Western CPE.
Guest Post: Relief for Audit Reporting
By: Jeff Sailor, CPA
One of Western CPE’s most popular instructors, Jeff Sailor brings expertise and a singular flair to his coursework, designed to combat “boring CPE.” With 30 years accounting experience and more than 10 as an AICPA peer reviewer, he’s as knowledgeable as he is thoughtful about his presentation. Read more about Jeff in our Instructor Spotlight and check out his CPE here. On May 1, 2020 the Auditing Standards Board issued SAS 141, which made official the decisions made at their April 20th meeting. This update extends the effective date for audit standards 134-140, which were all to be effective for periods ending after …
IRS Say PPP Loan Forgiveness Makes Expenses Not Deductible
By: As we struggled through the Paycheck Protection Program (PPP) loan applications this last month, something didn’t make sense in the way that the loan forgiveness worked. The recurring question we came up with was “How are expenses treated if they are paid with tax-free money?” We asked and the IRS answered. In Notice 2020-32, the IRS says that no deduction is allowed for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a PPP loan. A recipient of a PPP loan can receive forgiveness of indebtedness on the loan in an amount equal …
Employer Payroll Tax Delay Can Help Cash-Strapped Businesses
The employer’s share of Social Security Tax (but not Medicare tax) can be delayed, and paid over two years. Many business clients may not know that the deferral applies to:Self-employed individualsRecipients of PPP loans, but only until the date of PPP loan forgivenessThe President is about to sign legislation to provide more funding to the PPP loans and SBA’s EIDL. Once we see the details, watch for an eTax Alert in your mailbox.EMPLOYER PAYROLL TAX DELAYEmployers must withhold social security taxes on employee wages. Self-employed individuals are subject to self-employment tax. Under CARES, taxpayers are allowed to defer paying the …
Guest Post: Current Expected Credit Losses (CECL) and the Virus
By: Jeff Sailor, CPA
One of Western CPE’s most popular instructors, Jeff Sailor brings expertise and a singular flair to his coursework, designed to combat “boring CPE.” With 30 years accounting experience and more than 10 as an AICPA peer reviewer, he’s as knowledgeable as he is thoughtful about his presentation.Read more about Jeff in our Instructor Spotlight and check out his CPE here.When I got up this morning and read my local newspaper, I was a little surprised by a prominent article I found. Please understand that in my paper, most of the articles usually begin with “Florida Man…” and end with something dumb that someone …
A Client Letter on the PPP Loan
The CARES Act provided for $359 billion in funding for The Paycheck Protection Program (PPP) loan. The money is quickly being exhausted by those who applied early. It’s not too late to apply now as Secretary of Treasury Mnuchin has asked Congress for another $250 billion. A lot of us were busy with tax returns (even if the due date was delayed) and we didn’t get information on these loans to our cash-strapped businesses and to our self-employed clients who are suffering from the Coronavirus slowdown.Do you need a client letter to send out now? Our colleague Alice Orzechowski has …
COVID-19 Relief for Taxpayers Claiming NOLs
TCJA made drastic changes to net operating losses (NOLs) by eliminating carrybacks, allowing only carryforwards, and limiting carryforwards to 80% of taxable income in the carryforward year. Then along came the coronavirus and Congress changed its mind in order to provide cash to virus-strapped businesses.The CARES Act amended §172(b)(1) to provide for a carryback of any net operating loss (NOL) arising in a taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2021, to each of the five taxable years preceding the taxable year in which the loss arises. In other words, NOL carryback rules for tax years …
IRS Extends Second Quarter Estimate Due Date— PLUS More
Last month the IRS announced that taxpayers generally have until July 15, 2020 to file and pay federal income taxes originally due on April 15. Notice 2020-23 extends more deadlines to July 15, 2020. The extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. Individuals, trusts, estates, corporations, and other non-corporate tax filers qualify for the extra time.The following are extended to July 15, 2020:Both the first and second quarter estimated tax paymentsFiscal year corporations with a due date between April 1 and July 15Form …
Guest Post: Financial Reporting and COVID-19
By: Jeff Sailor, CPA
One of Western CPE’s most popular instructors, Jeff Sailor brings expertise and a singular flair to his coursework, designed to combat “boring CPE.” With 30 years accounting experience and more than 10 as an AICPA peer reviewer, he’s as knowledgeable as he is thoughtful about his presentation.Read more about Jeff in our Instructor Spotlight and check out his CPE here.Financial Reporting and the VirusAs most people are working together to ensure the safety of their family and those in their communities, I believe it’s safe to assume that financial statements disclosures are not high on your priority list. However, the potential impact of …
SBA Releases “Interim Final Rule” on Paycheck Protection Program Loans
SBA Answers Questions in its “Interim Final Rule” on Paycheck Protection Program LoansCoronavirus has caused panics — panics over toilet paper, Lysol wipes, beans, and masks. But another panic has begun — the panic over Paycheck Protection Program Loans. Included in the CARES Act is a $349 billion forgivable loan program to help struggling employers pay wages, rent, mortgage interest, and utilities for eight weeks. Opening day for applications was April 3, 2020.For a basic explanation to use for your client, the SBA has posted a Small Business Guidance and Loan Resources, and the US Chamber of Commerce has posted its Small …
RETIREMENT CHANGES IN THE CARES ACT
The Coronavirus has infected our personal and professional lives in many way. After at a lot of talk, Congress did something! On Mar. 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, (CARES Act, HR 748), a $2.2 trillion stimulus package to mitigate the impact of the Coronavirus pandemic.CARES includes retirement plan changes that are important to communicate to our clients.Temporary Waiver of RMDsUnder §401(a)(9), a retirement plan or IRA owner must take a required minimum distribution (RMD) annually once the owner reaches age 72. However, for calendar year 2020, CARES waives the required …
Guest Post: Coronavirus Tax Summary
By: Edited ByDanny C. SantucciDisclaimer at bottom of summaryDanny Santucci, BA, JD, is a prolific author on tax and finance. Danny has 43 Self-Study courses with Western CPE. His practice emphasizes business taxa-tion, real estate law, and estate planning. Speaking to more than 100 groups nationally each year, he is known for spicing up his extensive expertise with an incredible sense of humor.Coronavirus Aid, Relief, and Economic Security (CARES) ActCoronavirus Aid, Relief, and Economic Security (CARES) Act, with a $2.2 trillion price tag, was signed into law on March 27, 2020, by President Trump. CARES will have a major impact on …
THE CARES ACT STIMULUS PAYMENT
The Coronavirus has infected our life in many ways. Family and friends are sick, quarantined or under a stay-in-place order. The stock market has crashed. The kids are out of school. Restaurants and shopping malls are closed. More than three million unemployment claims were filed in one week. Enough of the cable news . . .After a lot of talk and ten versions (one marked “final, final), Congress did something. President Trump signed into law on March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act, (the CARES Act, HR 748), a $2 trillion stimulus package to mitigate the …
CLIENT LETTER — STIMULUS PAYMENT
Dear Client,The Coronavirus has infected our life in many ways. Family and friends are sick, quarantined or under a stay-in-place order. The stock market has crashed. The kids are out of school. Restaurants and shopping malls are closed. More than three million unemployment claims were filed in one week. Enough of the cable news . . . If you are laid off or you have closed your business, you know the details.After a lot of talk, Congress did something. President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, (CARES Act), a $2 trillion stimulus package to …
MOST EMPLOYERS REQUIRED TO PAY SICK LEAVE IF ABSENCE RELATED TO CORONAVIRUS
Revised March 30, 2020MOST EMPLOYERS REQUIRED TO PAY SICK LEAVE IF ABSENCE RELATED TO CORONAVIRUS (IR-2020-57)The US has more than 65,000 (changing by the hour) people diagnosed with Coronavirus (COVID-19). Many more have symptoms, are quarantined for exposure, and are seeking medical testing. As a start to helping those affected (part one of two or maybe three stimulus bills according to Speaker Pelosi), Congress passed a sick leave bill.Tax practitioner planning. Apologies for the length of these abbreviated facts on the new sick leave provisions. There are more details. This is a summary.FOR YOU AND YOUR BUSINESS CLIENTSThe Families First Coronavirus Response Act (FFCRA), signed into …
The IRS Extends COVID-19 Pandemic Relief
The IRS extended COVID-19 pandemic relief for tax payments due on Apr. 15, 2020 until Jul. 15, 2020 in response to the ongoing Coronavirus Diseases 2019. The grant of relief is for PAYMENTS ONLY. It does not extend the filing deadline dates. Any person with a Federal income tax payment due on April 15, 2020 to be an affected person. Payments of federal income, including self employment tax, due on April 15, 2020 are postponed to July 15, 2020.For any postponed payments,No penalties,No interest orNo additions to taxwill be assessed for the period April 15 to July 15, 2020. Penalties, interest …
As of Today. . .Mnuchin Announces Delay in Tax Payments
Treasury Secretary Steven Mnuchin announced a three-month reprieve for the payment of taxes normally due April 15th. The deferral of the tax payment is interest and penalty free for 90 days — up to $1 million for an individual and $10 million for a corporation.Note. This change affects about $300 billion in tax payments, and is meant to improve the health of our virus-sickened economy.What do you need to do for your client?Secretary Mnuchin said that “All you have to do is file your taxes. You’ll automatically not get charged interest and penalties.” You’ll also need to communicate to your clients …
2020 Tax Season – Staff Meeting Agenda January
2020 Tax SeasonA staff meeting to start another tax season is a smart idea, whether your staff simply includes your spouse and an admin, or rather partners, preparers, reviewers, and bookkeepers. The Tax Cuts and Jobs Act (TCJA) included more than 100 changes to our individual and business returns, including the important QBI deduction. Communicating updated information to all staff who deal with returns is crucial. One year, I discovered that my most valuable team member didn’t know what I assumed was a simple “everyone-knows- that” change. Errors resulted from my assumptions, and I quickly understood the necessity of starting …
Final 2019 Form 1040 – 7 Changes to Note
The IRS has released its final version of the 2019 Form 1040.Say bye-bye to the “postcard” — sort of.For 2018, the idea of a postcard tax return resulted in the old and trusted Form 1040 transforming into an eight-page problem. The first two pages were each printed on a half sheet of paper to resemble a postcard-sized Form 1040 (although many software companies received IRS permission to cram the two half pages into one). Six schedules to support the “postcard” followed.For 2019, there have been some improvements. First, the six 2018 schedules have been cut to three for 2019. Schedule 1 reports additional income and …
The SECURE Act – Last Minute Legislation Includes Pension and IRA Changes
By: The Further Consolidated Appropriations Act, 2020, (HR 1865) was must-pass legislation or the government would have closed down on Dec. 21, 2019. Tacked onto the critical appropriation bill were many year-end tax changes — some retroactive. Included in the new law are pension and IRA reform provisions, extenders, disaster relief, and the repeal of a few ACA taxes.Below is a summary of major provisions of the Setting Every Community up for Retirement Enhancement (the SECURE ACT)1, the first pension and IRA overhaul since the 2006 Pension Protection Act.SECURE ACTThe bipartisan Setting Every Community up for Retirement Enhancement (SECURE) Act was passed …
Last Minute Appropriations Act Includes Extenders December 30, 2019
The Further Consolidated Appropriations Act, 2020, (HR 1865) was must-pass legislation or the government would close down on Dec. 21, 2019. Tacked onto the critical appropriation bill were many year-end tax changes — some retroactive. Included in the new law are extenders, pension reform, disaster tax relief, and the repeal of a few ACA taxes.Extender ProvisionsBelow is a summary of the most significant extender provisions (Division Q starting on Page 694) included in the Appropriations Act:INDIVIDUAL & FAMILYMEDICAL EXPENSE DEDUCTION 7.5% AGI LIMIT EXTENDEDFor taxable years ending before Jan. 1, 2021, the threshold for deducting medical expenses is 7.5% (was 10%) for …