Authortaxingtimes

New COVID-19 Relief Bill Allows Deductibility of Expenses Paid with Forgiven PPP Loans

By: Amanda Wilson

As I previously reported in an article published earlier this month, the IRS has repeatedly taken the position that businesses cannot deduct otherwise deductible expenses (such as payroll or rent) if the business used Paycheck Protection Program (“PPP”) loan proceeds to pay those expenses if the PPP loan is later forgiven. I’m happy to share that Congress is rejecting the IRS’s position.

The new COVID-19 relief package announced by Congress yesterday will include a provision that allows businesses to take tax deductions for expenses paid with forgiven PPP loans. The specifics of this provision are not yet known, but it is expected that this will provide a significant tax benefit to businesses that incurred PPP loans.

Be sure to visit our COVID-19 Resource Center page to keep up to date on the latest news.

New Treasury and IRS Regulations Bless SALT Deductions for Pass-through Entities

By: Amanda Wilson and Andrew Kelly

Yesterday, the U.S. Department of the Treasury and Internal Revenue Service (IRS) issued a press release and related notice regarding proposed regulations which clarify that the $10,000 cap on state and local tax (SALT) deductions imposed by the Tax Cuts and Jobs Act of 2017 does not apply to pass-through entities (PTEs).

While the primary purpose of a PTE is to allow income to “flow through” the entity to its respective owners (thus being taxed only at the individual level), several states have now passed laws which allow PTEs to pay state income taxes at the entity level. These state laws, which have now essentially been blessed by the Treasury and IRS, provide a way for PTE owners to avoid the $10,000 cap on SALT deductions as the Tax Cuts and Jobs Act of 2017 only applies this cap to individuals.

In addition to stating that “State and local income taxes imposed on and paid by a pass-through entity are allowed as a deduction by [pass-through entities] in computing [their] non-separately stated taxable income or loss for the taxable year of payment,” the press release explains that the proposed regulations will be effective as of November 9, 2020, and will also allow taxpayers to elect to apply the rules described in the notice to specified income taxes paid in a taxable year of a [PTE] ending after December 31, 2017, and before the date the forthcoming proposed regulations are published in the Federal Register.

Disney Tax Ruling & Property Valuation [Lowndes Legal Talk]

Tune in to Lowndes Legal Talk featuring attorneys Jackie Bozzuto and Brendan Lynch discussing the closely-followed case, Singh vs. Walt Disney Parks and Resorts, in which the court ruled that the application of Rushmore was illegal as applied in the 2015 assessment of Disney’s Yacht & Beach Club property. They also address what the decision could mean for appraisers who continue to employ Rushmore to value hotel and resort properties in the state.

Lowndes Legal Talk is a video and podcast series designed to provide you with perspectives on the legal and business issues affecting you.

View additional videos here.

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