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EIDL Loans, Restaurant Grants Offer Relief to Struggling Small Businesses

The American Rescue Plan Act (ARPA), signed into law in early March, aims at offering widespread financial relief to individuals and employers adversely affected by the COVID-19 pandemic. The law specifically targets small businesses in many of its provisions.

If you own a small company, you may want to explore funding via the Small Business Administration’s (SBA’s) Economic Injury Disaster Loan (EIDL) program. And if you happen to own a restaurant or similar enterprise, the ARPA offers a special type of grant just for you.

EIDL advances

Under the ARPA, eligible small businesses may receive targeted EIDL advances from the SBA. Amounts received as targeted EIDL advances are excluded from the gross income of the person who receives the funds. The law stipulates that no deduction or basis increase will be denied, and no tax attribute will be reduced, because of the ARPA’s gross income exclusion.

In the case of a partnership or S corporation that receives a targeted EIDL advance, any amount of the advance excluded from income under the ARPA will be treated as tax-exempt income for federal tax purposes. Because targeted EIDL advances are treated as such, they’ll be allocated to the partners […]

By Linkenheimer LLP|2021-04-01T17:24:25+00:00April 1st, 2021|arpa, restaurant, sba|0 Comments

Depreciation & Expensing Provisions in the PATH Act

Depreciation & Expensing Provisions in the PATH Act

The PATH Act makes permanent the enhanced Code Sec. 179 expensing and phaseout limits, and 15-year write-off for qualifying leasehold improvements, restaurant buildings and improvements, and retail improvements. In addition, the Act provides for a retroactive extension of provisions that had expired at the end of 2014, including 50% bonus first-year depreciation (at a rate that gradually decreases). For further information and to discuss whether your purchase is a “qualifying property”, please contact us.

Enhanced Expensing Made Permanent

Under pre-Act law. For tax years beginning after Dec. 31, 2014, the maximum expensing limit had dropped to $25,000, and the investment ceiling dropped to $200,000.

New law. The Act makes the following changes to the Code Sec. 179 expensing election:

The $500,000 expensing limitation and $2 million phase-out amounts are retroactively extended and made permanent. After Dec. 31, 2015, both the expensing and phase-out limits are indexed for inflation.
The rule that allows expensing for computer software is retroactively extended and made permanent.
Qualified real property (generally qualified leasehold improvements, qualified restaurant, and qualified retail property) is eligible to be expensed.
For tax years beginning after Dec. 31, 2015, air conditioning and heating units are eligible for expensing.

15-Year Write-off for Qualified Leasehold and Retail Improvements and Restaurant Property Made Permanent

Under […]

By Linkenheimer LLP|2020-09-03T20:05:17+00:00January 12th, 2016|depreciation, expensing, irs|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

Tax Tip Credit for Restaurant Owners

Many restaurant owners are missing out on a significant tax savings opportunity (free money!) by failing to claim the FICA tip credit when they file their tax returns. The “Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips”, otherwise known as the “FICA tip credit”, is a nonrefundable credit that is available to taxpayers whose employees are receiving tips from customers for providing, delivering, or serving food or beverages for consumption. If you as the employer paid social security and Medicare on these tips as they were reported to you by the employee throughout the year, you are likely entitled to this tax credit.

The credit is limited if you are not paying your employees minimum wage, but as long as you are paying minimum wage, you should be entitled to a credit for the entire portion of FICA taxes paid on these tips. In order to estimate the tax benefit of your FICA tip credit, you can multiply the “social security tips”, box 7 of your Form W-3, Transmittal of Wage and Tax Statements, by 7.65%. This credit is a nonrefundable credit, meaning that you […]

By Linkenheimer LLP|2020-09-03T20:05:35+00:00December 30th, 2014|tax credit, tips|0 Comments