On June 10, 2020, the AICPA issued accounting guidance for Paycheck Protection Program (PPP) loans. The guidance in Technical Question and Answer (TQA) 3200.18, Borrower Accounting for a Forgivable Loan Received Under the Small Business Administration Paycheck Protection Program includes multiple accounting options, which vary by entity type. Under the guidance, nongovernmental entities other than not-for-profit (NFP) entities may account for PPP loans in accordance with FASB ASC 470, Debt, or, if the entities expect to meet the PPP’s eligibility criteria and conclude that the PPP loans represent, in substance, grants that are expected to be forgiven, they may, by way of analogy, account for the loans under International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance. The SEC Staff has indicated that they would not object to SEC registrants utilizing either of these accounting models to account for PPP loans, provided certain conditions are met. The TQA further indicates that if nongovernmental entities other than NFPs expect to meet the PPP’s eligibility criteria and conclude that the PPP loans represent, in substance, grants that are expected to be forgiven, they could also analogize to: (1) FASB ASC 958-605 (i.e. account for the loans as conditional contributions) or (2) FASB ASC 450-30, Gain Contingencies. Under the TQA’s guidance, NFP entities may account for PPP loans in accordance with FASB ASC 470, Debt, or, if the NFP entities expect to meet the PPP’s eligibility criteria and conclude that the PPP loans represent, in substance, grants that are expected to be forgiven, they may account for them in accordance with FASB ASC 958-605. If material, all nongovernmental entities should disclose their PPP loan accounting policies and the related financial statement impacts. The accounting for PPP loans under the various models discussed above are summarized below. ASC 470 Record the loan as a liability Record interest at the stated loan rate (i.e., even if the stated rate is below the market rate) Continue to record the loan as a liability until the entity is legally released or the loan is repaid If legally released, the entity would record the amount forgiven as a gain on extinguishment IAS 20 Record the loan as a deferred income liability Once it is “reasonably assured” (similar to “probable” in U.S. GAAP) that the conditions for forgiveness will be met, the entity would systematically reduce the liability with an offset to earnings as the related costs are incurred The offset to earnings can either be presented as:
a credit in the income statement:
in its own financial statement line item, or
in a general financial statement line item such as “other income,” or 
a reduction in the related expenses ASC 958-605 Record the loan as a refundable advance Once the forgiveness conditions are substantially met or explicitly waived, the entity would reduce the refundable advance and record a contribution for the amount forgiven ASC 450-30 Record the loan as a liability When all contingencies related to forgiveness have been met and the amount forgiven becomes realized or realizable, the entity would reduce the liability with a corresponding offset to earnings For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

On June 10, 2020, the AICPA issued accounting guidance for Paycheck Protection Program (PPP) loans.

Assurance

ASC 606 Revenue Recognition

ASC 842 Lease Accounting

Financial Statement Audit

Employee Benefit Plan Audit

Single Audits & Federal Awards Compliance Audits

Coronavirus Resource Center

Paycheck Protection Program (PPP) Solutions

AICPA issues accounting guidance for Paycheck Protection Program (PPP) loans

It has been quite a year and we’re not even half way through. A declared pandemic, multiple rounds of government-injected stimulus packages and nationwide closures have completely changed the way we currently do business. Only three years ago, we were just beginning a conversation about major tax reform. Now, many of those historical tax changes have been rolled back or deferred in an effort to help taxpayers survive the COVID-19 pandemic and resulting economic collapse.  The general theme of the tax provisions enacted in the past few months has been to increase deductions, reduce restrictions on the ability to utilize losses, and provide opportunities to carry back net operating losses and claim refunds. Changes include correcting the so-called “retail glitch” in the Tax Cuts and Jobs Act that had failed to classify qualified improvement property as bonus eligible with a 15-year life, ease restrictions on the deductibility of business interest expense, and allow taxpayers to retroactively make certain changes back to 2018.  Taking each provision alone, they sound relatively simple. However, their interplay coupled with the processing of amending prior returns, considering different tax rate structures, and revising past elections add considerable complexities in analyzing how to best apply these new rules for yourself and your business. To supplement our alerts and webinars, we are summarizing here how to take advantage of the many facets of the stimulus packages. 
Visit the sections below for more on what taxpayers need to know to help them through the pandemic and beyond: Planning to manage the QIP and business interest expense changes Should you consider a casualty loss provision for your business?  Federal coronavirus rescue programs
– Protection Program
– Economic Injury Disaster Loans (EIDL) Program
– Employee retention credit Upcoming compliance deadlines for reacting to CARES Act changes  Lease modifications: Watch out for IRC section 467  Working with the IRS during a pandemic  International taxation relief provisions  States’ reactions in a pandemic environment 
For more information, please visit our Coronavirus Resource Center.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

Baker Tilly’s federal, state and local, and international tax professionals review how taxpayers of all types and sizes can benefit from the coronavirus stimulus packages.

Federal Tax

International Tax

State & Local Tax

Federal tax coronavirus resources

State and local tax coronavirus resources

Tax planning during and after COVID-19

Authored by Colin Walsh, Paul Dillon and Michael Wronsky On June 4, 2020, the IRS issued Notice 2020-39  (the Notice), granting relief to qualified opportunity funds (QOFs) and  their investors from some of the opportunity zone (OZ) program’s  time-sensitive requirements. This latest tranche of COVID-19-related  guidance provides automatic relief with respect to some of the  provisions as well as confirmation of the extensions to comply with  others in the event of a federally declared disaster available under the  OZ regulations.  Specific relief provided: Investors  are granted an additional extension of the 180-day period in which they  must acquire a QOF interest in exchange for the OZ tax benefits. In  April, the IRS provided investors whose 180-day period would have  otherwise ended between April 1, 2020, and July 14, 2020, until July 15,  2020, to make an eligible investment in a QOF (please see our previous Tax Alert). Taxpayers  now have until Dec. 31, 2020, to invest if their 180-day period  otherwise would have ended on or after April 1, 2020, and before Dec.  31, 2020. This relief is automatic. Significantly,  pass-through gains reported on a 2019 Schedule K-1, which previously had  to be invested by Sept. 11, 2020, can now be invested until Dec. 31,  2020.  A QOF’s failure to comply with the 90% asset test will be disregarded. A  QOF will incur steep penalties if it fails to hold 90% of its assets in  qualified opportunity zone property (QOZP) as of semi-annual testing  dates, unless it can demonstrate the failure was due to reasonable  cause. The Notice provides a QOF that fails to meet this test whose (1)  last day of the first six-month period of the taxable year, or  (2) the last day of the taxable year falls between April 1, 2020, and  Dec. 31, 2020, will automatically be deemed to have a reasonable cause,  and the failure will be disregarded for determining whether the QOF  otherwise is compliant with the program’s rules. In other words, no penalties will be assessed.  30-month substantial improvement period is extended. A  QOF or qualified opportunity zone business (QOZB) that purchases  non-original use property must “substantially improve” it in order for  the property to qualify as qualified opportunity zone business property  (QOZBP). Broadly, substantial improvement requires that an amount  exceeding the QOF’s or QOZB’s purchase price be spent improving the  property within any 30-month period. The Notice automatically tolls all 30-month windows during the period beginning on April 1, 2020, and ending Dec. 31, 2020.  For instance, if a QOZB’s substantial improvement period began April 1,  2020, that QOZB would have 39 months to improve the property.  Confirmation of federally declared disaster extensions provided by final regulations: As  a result of the national emergency declarations issued by the president  in response to COVID-19, every census tract designated as an OZ is  located within a major disaster area as of Jan. 20, 2020. The Notice  confirms the federal disaster relief included within the OZ regulations  is available to taxpayers. Critically, a QOZB has additional time to make expenditures pursuant to a working capital safe harbor.  A QOZB can utilize up to two consecutive 31-month safe harbors to  deploy working capital to acquire or construct property, or start a  business within an OZ pursuant to a written plan, without running afoul  of certain asset tests. The Notice makes clear that assuming all other  parameters of the working capital safe harbor are met, a QOZB will  receive not more than an additional 24 months to expend such working  capital on account of the federally declared disaster, as provided for  under the OZ regulations.  Please reach out to your Baker Tilly tax advisor to discuss how these potential changes may affect your tax situation.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

The IRS offered relief to opportunity zone funds and investors, including granting an additional extension to make an eligible investment in a qualified opportunity fund.

Real Estate

Real Estate Investors

Multifamily Housing

Lodging

Opportunity Zones

Real estate coronavirus resources

IRS provides additional relief to OZ funds and investors

Authored by Timothy Kosiek and Christopher DeMarco The small business owner's guide to the CARES Act For borrowers with a straightforward PPP loan compliance environment, we have developed a self-service, Excel-based loan forgiveness calculator. But if your situation is more complex, or you have limited staffing available to support the loan requirements, we can provide an automated approach to forecasting eligible spend, monitoring specific payroll exceptions, and managing compliance with final documentation requirements.
Business owners have been strongly affected by COVID-19 and are left with many questions. The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress are intended to assist them in overcoming the current challenges. Baker Tilly developed the below FAQs to guide business owners as well as certain not-for-profits and other employers during this uncertain time.  NOTICE: Baker Tilly is providing updated information as it becomes available. Due to the nature of the emerging and rapidly evolving information from government and non-government relief programs, some requirements and offerings may change before they are listed here. Please consult with your loan officer for the most current details. Paycheck Protection Program (PPP) loans The program provides cash-flow assistance through 100% federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans are forgiven up to the full principal amount of qualifying loans guaranteed under the PPP, which would help your workers remain employed, as well as help your small businesses and our economy to snap back quicker after the crisis.  PPP has a host of attractive features, such as forgiveness of up to eight weeks of payroll based on employee retention and salary levels, no SBA fees and at least six months of deferral with maximum deferrals of up to a year. Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between Feb. 15, 2020, and June 30, 2020. This program would be retroactive to Feb. 15, 2020, to help bring workers who may have already been laid off back onto payrolls.  View the PPP application Expand the section(s) below to view the FAQ.
Baker Tilly COVID-19 support During this uncertain time, Baker Tilly is ready to help you with practical advice on informing and supporting your employees as well as keeping your business running. 
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.

Coronavirus Aid, Relief, and Economic Security Act – Baker Tilly specialists answer all your questions.

AICPA issues accounting guidance for Paycheck Protection Program (PPP) loans

Tax planning during and after COVID-19

IRS provides additional relief to OZ funds and investors

Paycheck Protection Program (PPP) FAQ

AICPA issues accounting guidance for Paycheck Protection Program (PPP) loans

Trending Tags