safe harbor - Linkenheimer LLP CPAs & Advisors

The Possible Tax Consequences of PPP Loans

If your business was fortunate enough to get a Paycheck Protection Program (PPP) loan taken out in connection with the COVID-19 crisis, you should be aware of the potential tax implications.

PPP basics

The Coronavirus Aid, Relief and Economic Security (CARES) Act, which was enacted on March 27, 2020, is designed to provide financial assistance to Americans suffering during the COVID-19 pandemic. The CARES Act authorized up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April, Congress authorized additional PPP funding and it’s possible more relief could be part of another stimulus law.

The PPP allows qualifying small businesses and other organizations to receive loans with an interest rate of 1%. PPP loan proceeds must be used by the business on certain eligible expenses. The PPP allows the interest and principal on the PPP loan to be entirely forgiven if the business spends the loan proceeds on these expense items within a designated period of time and uses a certain percentage of the PPP loan proceeds on […]

By Linkenheimer LLP|2020-09-03T20:02:07+00:00August 10th, 2020|New Tax Laws, small business|0 Comments

Finding a 401(k) That’s Right for Your Business

By and large, today’s employees expect employers to offer a tax-advantaged retirement plan. A 401(k) is an obvious choice to consider, but you may not be aware that there are a variety of types to choose from. Let’s check out some of the most popular options:

Traditional. Employees contribute on a pretax basis, with the employer matching all or a percentage of their contributions if it so chooses. Traditional 401(k)s are subject to rigorous testing requirements to ensure the plan is offered equitably to all employees and doesn’t favor highly compensated employees (HCEs).

In 2018, employees can defer a total amount of $18,500 through salary reductions. Those age 50 or older by year end can defer an additional $6,000.

Roth. Employees contribute after-tax dollars but take tax-free withdrawals (subject to certain limitations). Other rules apply, including that employer contributions can go into only traditional 401(k) accounts, not Roth 401(k)s. Usually a […]

By Linkenheimer LLP|2020-09-03T20:04:37+00:00June 27th, 2018|401k, roth ira|0 Comments

Retail stores and restaurants: remodel or refresh is deductible

Retail and restaurants now have a safe harbor income tax accounting method to determine whether costs paid to refresh or remodel a qualified building are deductible repairs and maintenance expenses, or if they must be capitalized. The safe harbor method simplifies the determination. Under the safe harbor, a qualified taxpayer deducts 75% of its qualified costs as repairs and maintenance and capitalizes the remaining 25% of its qualified costs. The revenue procedure is effective for tax years beginning after 2013. Rev. Proc. 2015-56, 2015-49 IRB . If you have any questions, please contact your Linkenheimer LLP CPA.

By Linkenheimer LLP|2015-11-30T21:41:48+00:00November 30th, 2015|deduction|0 Comments

IRS Clarifies Tangible Property Regulations

IRS Clarifies Tangible Property Regulations: The IRS has released new answers to Frequently Answered Questions (FAQs) on the final tangible property regulations, including information on simplified procedures for small business taxpayers. The FAQs provides guidance on the de minimis safe harbor election, which allows many businesses to do away with capitalizing and depreciating (or claiming a Section 179 expense) for many lower-cost assets, such as furniture, equipment, and computers. They also clarify that the de minimis safe harbor election is not a change in accounting methods and does not require the filing of Form 3115 (Application for Change in Method of Accounting). Nor does a taxpayer need to file a Form 3115 to stop using the de minimis safe harbor for a subsequent tax year. Additionally, the FAQs explain the rules for the treatment of materials and supplies costs. The IRS’s FAQs on the tangible property final regulations are available at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Tangible-Property-Final-Regulations . If you still have questions on how the tangible property regulations may affect you and your business, please contact your Linkenheimer CPA.

By Linkenheimer LLP|2015-03-26T20:19:45+00:00March 24th, 2015|Tangible Property Regulations|0 Comments

Tangible Property Regulations That Will Effect Every Business and Property Owner

Deducting and capitalizing business expenses under final regs

An important development this year will affect every business, including yours. The IRS has issued long-awaited regs on the tax treatment of amounts paid to acquire, produce, or improve tangible property. The regs explain when those payments can be deducted, which confers an immediate tax benefit, and when they must be capitalized.

These final regs retain many provisions of the temporary regs that were issued in 2011. However, the final regs refine and simplify the temporary regs and add new safe harbor provisions that will help you to nail down expense deductions.

The regs must be followed for tax years that begin after Dec. 31, 2013 – whether a calendar year or a fiscal year, such as a fiscal year beginning July 1, 2014. Taxpayers have the option of applying the final regs retroactively to the 2012 and 2013 tax years. There’s also a third option to apply the temporary regs to the 2012 and 2013 tax years.

The regs are lengthy and complex. The summary below is intended to give an overview of how they treat issues of deduction and capitalization. We would be happy to […]

By Linkenheimer LLP|2020-09-03T20:05:32+00:00February 12th, 2015|Tangible Property Regulations|0 Comments