COVID Relief Bill: PPP-Paid Expenses Are Deductible (Updated 12/28/2020)

by Jim Clarke

This past Monday, December 21, a $900 billion pandemic relief bill came out of the U.S. House and Senate. It is called the Consolidated Appropriations Act, 2021. If President Trump signs it, it will become law. Weighing in at 5,593 pages in length, it addresses many areas, including vaccines, education, childcare, jobless benefits, energy, and national security.

Part of the bill is the COVID-Related Tax Relief Act of 2020 (COVIDTRA).

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Weintraub Tobin Ranked in U.S. News – Best Lawyers® 2021 “Best Law Firms”

SACRAMENTO, CA – Weintraub Tobin, a leading California full-service law firm, has been recognized with numerous rankings in the 2021 edition of U.S. News – Best Lawyers® “Best Law Firms.” The tiered rankings are assigned to law firm practice groups by metropolitan area. Thousands of firms are considered and reviewed nationwide through a detailed evaluation process before U.S. News, and Best Lawyers®  make selections for “Best Law Firms” rankings.

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Business Focus Seminar 2020 - Helping Your Business Survive & Thrive Through COVID-19

A video archive for this event is available at this link: https://bit.ly/BusinessFocus2020

On October 28, 2020, Weintraub Tobin partnered with BFBA, Chase Bank, and CVF Capital Partners to present Business Focus 2020: Helping your Business Survive and Thrive Through COVID-19.  The virtual and interactive event addressed the “new normal” business landscape brought about by the economic and social changes of the COVID-19 pandemic.

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WEBINAR: Main Street Lending Program

What is the Main Street Lending program, and how is it different than the PPP and other business loans?

On June 30, 2020, Justin Borrowdale and Dan Franklin of River City Bank discussed the Main Street program – what businesses are eligible, unique program features, and documentation needed.

Topics:
• Program Overview
• Borrower Eligibility
• Loan Terms and Documentation
• Borrower certifications,

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Opportunity Zone Funds and Investors Get Relief in Light of COVID-19

On June 4, 2020, the Internal Revenue Service published Notice 2020-39 (Notice) which provides relief to qualified opportunity funds (QOFs) and their investors in light of the COVID-19 pandemic.  Here is a summary, and more details follow below:

  • Investors who otherwise would be required to reinvest capital gains into a QOF any time this year on or after April 1 now have until December 31, 2020 to reinvest such gains.

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Paycheck Protection Program Flexibility Act of 2020

On June 5, 2020, President Trump signed into law H.R. 7010 – the Paycheck Protection Program Flexibility Act of 2020 (“PPPFA”). The PPPFA makes significant borrower favorable amendments to the Paycheck Protection Program (“PPP”).

Background.

As our readers know, the PPP loan program was enacted pursuant to the CARES Act as a tool to help small businesses keep employees on their payroll. The draw of the program is the ability for borrowers to have the loans forgiven.

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SBA Releases PPP Loan Forgiveness Application (UPDATED*)

On Friday May 15, 2020, the Small Business Administration (“SBA”) released the application borrowers will use to request forgiveness of their Paycheck Protection Program (“PPP”) loans.  On Friday May 22, 2020, the SBA and Treasury jointly issued an Interim Final Rule clarifying some portions of the forgiveness application.  PPP borrowers have been awaiting additional guidance regarding the forgiveness portion of the program for well over a month.  While the application and interim final provides some additional guidance,

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Further SBA Guidance on Necessity Certification for PPP Loans

Small Business Administration (SBA) guidance published on May 13, 2020 adds clarity to the “necessity” certification that borrowers were required to make when applying for Paycheck Protection Program (PPP) loans.  According to this guidance, borrowers that received PPP loans of less than $2 million will be deemed to have made the necessity certification in good faith.  As to borrowers with loans greater than $2 million, if the SBA notifies the borrower that the SBA has determined that the borrower lacked an adequate basis for the necessity certification,

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IRS Issues Clarification on Deductibility of Expenses Paid with Forgiven PPP Loans

The Paycheck Protection Program (“PPP”) was established by the recently enacted CARES Act. PPP allows approved lenders to make loans to small businesses operating the United States. The federal government guarantees the repayment of PPP loans while providing borrowers with favorable repayment terms. The loans may be forgiven if the proceeds are expended primarily on employee payroll costs and if certain other employment-related standards are satisfied (we will discuss these requirements in further detail in a future alert following receipt of additional guidance from the Treasury Department).

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SBA Guidance on Borrower Certification for PPP Loans (Updated)

If your business received a Paycheck Protection Program (PPP) loan, now may be a good time to look at the new guidance from the Small Business Administration (SBA) to see whether the business should consider returning the money if the business did not really “need” it.  If, after considering the guidance, the business determines it does indeed need the loan, the business should ensure it has documentation demonstrating such need.

Background

On April 24,

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