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What is Cryptocurrency and how does it affect your taxes?

Cryptocurrency is a digital or virtual currency. Virtual currency is defined by the IRS in Revenue Ruling 2019-24, as “a digital representation of value that functions as a medium of exchange, a unit of account, and a store of value other than a representation of the United States dollar or a foreign currency.” Cryptocurrency has no centralized or administrative storing house; all the transactions are stored globally in multiple locations at once. Cryptocurrency is usually stored in electronic Wallets and accounts whereby the only person with the ability to access…

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FASB delays revenue recognition and lease accounting standards

As a result of the coronavirus pandemic, the Financial Accounting Standards Board (FASB) has given some relief to private businesses and non-profit organizations that have not yet issued their 2019 financial statements.  The FASB formally issued Standards Update No. 2020-05 which delays the required implementation date of Topic 606 – Revenue from Contracts with Customers and Topic 842 – Leases. The update was released and is effective on June 3, 2020. Implementation for Topic 606 – Revenue from Contracts with Customers is now required for annual reporting periods beginning after…

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Payroll and SE Tax Payment Delay Now Allowed with PPP loans

The CARES Act included a provision for deferred payment of Social Security taxes, but the relief was not available to taxpayers with debt forgiveness under certain loans with the Small Business Act.  The June 2020 Paycheck Protection Program (PPP) Flexibility Act expands the relief to taxpayers with a PPP loan, even if the loan is forgiven in 2020. Employers can choose to defer paying the employer portion of Social Security taxes and eligible self-employed individuals can defer 50% of their self-employment tax based on 12.4% of self-employment income through December…

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PPP Flexibility Act

The Paycheck Protection Program (PPP) Flexibility Act, making critical changes to the PPP loan rules, has been signed. 8-week period extended to 24-week PPP loan borrowers can now choose to have 24 weeks, rather than 8 weeks, to spend funds received in order to qualify for forgiveness. The deadline to use funds is 24 weeks from the date the loan funded or December 31, 2020, whichever comes first. 75% payroll rule reduced to 60% Initially, 75% of funds had to be used for payroll, with the remaining funds being used…

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INCREASED FLEXIBILITY FOR SECTION 125 CAFETERIA PLANS

The Internal Revenue Service (IRS) released guidance on May 12, 2020, to allow temporary changes to Section 125 cafeteria plans. The guidance addresses unanticipated changes in expenses because of the COVID-19 pandemic. IRS Notice 2020-29 provides greater flexibility for taxpayers by: extending claims periods for taxpayers to apply unused amounts remaining in a health FSA or dependent care assistance program for expenses incurred for those same qualified benefits through December 31, 2020 expanding the ability of taxpayers to make mid-year elections for health coverage, health FSAs, and dependent care assistance…

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STATE TAX DUE DATES VARY

The IRS extended the filing and payment deadline to July 15, 2020, for 2019 taxes due between April 1 and July 15, including 2020 1st and 2nd quarter estimated tax payments. Unfortunately, states did not consistently follow this direction. The AICPA has provided a chart with up-to-date state tax filing guidance (click here). All states with a personal income tax have extended the April 15, 2020, due date. 40 states have a July 15 deadline and 7 states have other dates. Some states have also updated their nexus guidance to…

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PPP Loan Under $2 Million Deemed to be Good Faith

On May 13, 2020, the SBA updated their Frequently Asked Questions (FAQ) document (click here) to include FAQ 46 in response to Paycheck Protection Program (PPP) loan applicants concerns about the requirements for good-faith certification concerning the necessity of their PPP loan request. SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: “Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than…

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New 2020 RMD Withdrawal and Redeposit Rules

In March, the Corona Aid, Relief, and Economic Security (CARES) Act was passed to provide relief to individuals, small businesses, medical organizations and government entities. Although the CARES Act is best known for the stimulus check provision and Paycheck Protection Program (PPP) loans, it also included a provision to waive the required minimum distribution (RMD) requirement for 2020. What plans are covered? The waiver of the RMD applies to a broad range of retirement accounts, including IRA accounts; SEP and SIMPLE IRAs; defined contribution plan accounts under 401(a), 401(k), 403(a),…

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NEW PPP GUIDANCE – CERTIFICATIONS AND REVIEWS

Paycheck Protection Program (PPP) loan applicants certified that “Current economic uncertainty makes this loan request necessary to support the ongoing operation of the applicant.” Early in the process, this was understood to mean the pandemic had caused, or was expected to cause, economic hardship, including reduced revenue or operations. The CARES Act specifically stated that the general SBA “access to capital” rule was waived and all small businesses were deemed to be affected by economic injury. The SBA has since added more responses to their Frequently Asked Questions (FAQ) document…

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PPP EXPENSE DEDUCTIBILITY QUESTION

Many companies who received a loan under the Paycheck Protection Program (PPP) are now working to determine and document the expenses that qualify for loan forgiveness. The SBA has provided some interim rules, but final rules and clarity are not yet available. Per the SBA, the amount eventually forgiven will be non-taxable income to the business. The IRS issued an unexpected ruling on April 30, 2020, stating that expenses funded with forgiven PPP loans are NOT deductible. This will greatly impact the taxable income of companies who received a forgivable…

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