Resources and LP's response to COVID-19.
Even among this disruption, there are a few things you can do today to help prepare you, your family and your business for the uncertain future.
- Realize a tax windfall for PPP loans was too good to be true: there’s no extra tax windfall for PPP loans. Under the Internal Revenue Code, if a lender cancels, forgives or writes off a debt that a business owes, the business has taxable income. When the Paycheck Protection Program (PPP) was adopted, the law made it clear that forgiveness of the part of the loan that is used for payroll (and a limited number of other expenses) would not trigger taxable income. That made sense – the government should not be collecting taxes on an emergency subsidy like this. But a lot of folks thought that the PPP went even further to create a tax windfall: the forgiven loan funds (used for payroll, etc.) would not only be exempt from tax, but the borrower could also get a tax deduction for those expenses. Seemingly, an extra tax benefit that some thought Congress might have intended (although there was no clear evidence of that). Most tax professionals put this in the too good to be true category, and in IRS Notice 2020-32, we see that is exactly the case. The long and short of it is that while forgiveness of a PPP loan used for payroll and other eligible expenses will not be taxable, taxpayers will not get a deduction for expenses essentially funded by the government. Makes sense, though it may hurt a bit to give up an added tax benefit you might have thought you had.
- Take time to review your estate plan. Now is the perfect time to make updates to your basic estate plan or consider more advanced planning techniques, such as gift/estate tax planning or asset preservation. During this pandemic, there are important aspects of your estate plan that you should be thinking about now. Does your estate plan still track your wishes? Should your selection of Trustees, Executors or Guardians remain the same? Has the makeup of your assets changed? These are things we as estate planners are thinking about today to best serve you.
- Make a list (or two or more). While working remotely allows all of us to accomplish some things, numerous tasks, both business and personal are simply impossible to perform due to the "stay at home" directives, and such tasks build up with each passing day. For instance, permit, inspection or reporting deadlines may be on hold, tax returns or payments postponed, routine medical appointments or business lunches cancelled. To help keep peace of mind, and avoid being overwhelmed as we start to see things return to normal, make a list of business obligations and personal tasks that you plan to undertake as the economy re-opens. Here’s our checklist for you. Three Things Weekly Roundup (4.27-5.1)
3+. Admit this is difficult. While we have little control over events or outcomes, there are things we can do to more mindfully cope. Find joy, express your gratitude, connect with others, help someone and perhaps even meditate. Now is the perfect time to be vulnerable. Click for tips.
For more resources and LP's response to COVID-19, visit this webpage.