All Forum Posts by: Michael Plaks

@Heather Lewis

No change to passive losses rules.

No change to depreciation, either, except one technical correction for "qualified improvement property."

Bonus has been 100% since 2018.

Many sources, including this one 
https://www.fastcompany.com/90490763/emergency-loan-advances-will-be-scaled-down-for-smaller-businesses-sba-confirms

10 days is nothing. Buckle up.

We all got excited about the EIDL loans from SBA: $10k free advance that does not have to be repaid, and then some great terms on up to $2M loans. 

We celebrated too early. First we learned that it is not $10k. It is $1k per W2 employee, so only $1k for a one-person business. And now they are trying to limit it to... wait for it... $15,000!  No typo here: $15k.
https://www.uschamber.com/letters-congress/us-chamber-letter-replenishing-funding-the-ppp-and-eidl-program

3+ hours of paperwork to apply for a $15k loan? No thanks.

Today, 4/14/2020, the SBA issued their 3rd "Interim Final Rule" (what a name!) in 2 weeks, reversing the method of applying for PPP loans/grants for partnership.

https://home.treasury.gov/system/files/136/Interim-Final-Rule-Additional-Eligibility-Criteria-and-Requirements-for-Certain-Pledges-of-Loans.pdf

"...However, if you are a partner in a partnership, you may not submit a separate PPP loan application for yourself as a self-employed individual. Instead, the self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership."

Too bad for those partnerships that already filed for PPP without including their active partners' compensation. We all thought it was the right procedure - until today. Oh well...

By the way, this same rule confirmed that PPP applications for self-employed investors must be based on their net income from 2019 Sch C. That part we sorta figured out before the official rule, but not the partnership rule.

@David B.

If you had no other costs like closing, then yes, $10k is capital gain taxable at your ordinary rate but capped at 25%. No big deal, if you ask me.

121 exclusion would not have shielded you from depreciation recapture, either.

@David B.

Unfortunately, the sale did not happen until 2020, so the residence exclusion is out.

However, I'm confused by you saying that you sold at a significant loss yet looking at a gain due to depreciation recapture. You only had 6 years of depreciation. Please clarify.

@Jennifer Bott

The Safe Harbor rule should be used for one purpose only: as toilet paper during the crisis. Your renting of the two units will most likely qualify without a need for the safe harbor. Of course, only your accountant can determine that with certainty.

That said, remember that you apply 20% to the NET income after all deductions, including depreciation. If you do have net income, there're ways to increase your depreciation and drop it to zero. At that point, 20% of zero becomes zero.

@Gabriel Benavidez

It does not matter for taxes how you buy your personal residence. Most people buy under their personal names, unless their attorneys recommend something else for legal reasons, not for tax reasons.

Ditto for the stock investments. No reason (that I know of) to do it through an LLC.

@Aiyman Khan

S-corp profits are always taxed at the personal level and are never double-taxed.

It may be either short-term capital gain or, more likely, regular business income. The decision is up to your accountant. The rates are the same either way, however the impact on your overall taxes can be different.

You need to put yourself on W-2 at some point. Until then, you can simply transfer money from your business account to your personal account.

A very important aspect of this new guidance is that it extends the statutory deadline to request 2016 refunds to July 15