Grant $5000 Lendistry in CA

[HOPE2]

Thanks in advance.

Is $5000 grant from Lendistry in CA taxable?

[Just-Lisa-Now-]

Put that exact question into Google and you should find what you need.

[qbteachmt · Accepted solution]

"From Lendistry" isn't the meaningful part.

"Grants from $5,000 to $25,000 to eligible small businesses and nonprofits impacted by COVID-19 and the related health and safety restrictions. Lendistry has been designated by the state to act as the intermediary for the Program to disburse the grant funds."

That means you need to understand the Grant, not who is administering it.

Bookmark this:

https://gpwcpas.com/grant-credit-loan-and-other-relief-comparison-chart/

And watch for newer info, meaning, the dates on web resources will matter, relative to the tax year you are working on and to the Assembly actions, including retro-active bills.

[HOPE2]

Thanks for helping.

Should it, 1099-G, consider as other income or business income for SE tax? If yes, what if the client has no Sch C in 2021?

[wjgutcpa]

Did you get a copy of the grant agreement related to them getting 5,000?

[HOPE2]

Client brought 1099-G that is the only I have and box 6 states TAXABLE GRANTS. I entered it like other 1099-G federally goes to Other income Sch 1 but for state CA , I have not seen anything on SCH CA.

[qbteachmt]

"I entered it like other 1099-G federally goes to Other income Sch 1"

But this is a Business grant program. That's not paid to an individual. It's paid to their business, even if they are a Sched C filer. If they got a grant, you create a Sched C for the year.

"and box 6 states TAXABLE GRANTS."

Exactly.

"These grants are taxable for Federal. Any expenses paid with this grant are deductible.

These grants are not taxable for California."

[qbteachmt]

"Did you get a copy of the grant agreement related to them getting 5,000?"

That is a good point. There are some purposes that will qualify for Fed exemption. Examples include HVAC improvements or PPE for a health care business, if you dig into details.

It isn't like the CA stimulus paid to individuals.

[HOPE2]

Perfect and thank you so much.

Is it included SE tax, Sch C worksheet asks us "ALL INCOME SUBJECT TO SE TAX"? Yes or No.

Also, which line on Schedule C should be entered for this taxable grant?

However, I see on Sch C line 5 it has QuickZoom to 1099-G, was wondering this part should be linked and where would be right place to enter PAYERS INFO.

Appreciate to help me.

[qbteachmt]

It's Business Income. It's not treated any differently (with those exceptions you would need to research, as noted). They got it because they are in business, and for being in business, and for the same reason as if they did that business.

For example, Shuttered Venue Grants were allowed, but not issued, in 2020. They are not taxable.

[HOPE2]

It's Business Income. It's not treated any differently (with those exceptions you would need to research, as noted). They got it because they are in business, and for being in business, and for the same reason as if they did that business.

I totally understood it's business income. If it goes to SCH C, QBI and SE tax appear on the client return while it was not income type which makes QBI and SE tax since it is a grant. So, I am confused how to enter this amount to which line on SCH C and where would be the place to enter Payer's info. 

[qbteachmt]

"while it was not income type which makes QBI and SE tax since it is a grant."

Okay, let's try this: If your client has/had business income, pretend this came from one of these people, too. It's part of Ordinary Business. "Grant" = not going to be repaid. But "grant" in this case is because of the business.

Follow the process: the Feds made funds available to States, who made it available to Counties and agencies and other entities, who awarded it to applicants based on the Business details.

You seem to be confusing Stimulus Funds paid to individuals, and Business Grants.

And I still don't see where it has been noted what the person listed when they applied for this grant. Examples:

A DJ submitted to replace lost income from Events = no different than if the performances had happened and been paid.

Or:

A Mental Health counselor submitted for covering the extraordinary costs for PPE, telehealth camera/mic equipment = some disease prevention grants are not taxable, even for Fed purposes.

You will have to know this.

[HOPE2]

Thanks. I searched it and used other link here were very helpful, it is federally taxable but is not taxable for California. My question is if it goes to SCH C should have QBI and SE tax as well but it is not as like as other business income since it is a grant.

What is your idea? And how about payer's info. 

[HOPE2]

Thanks for explanation. But my questions were about how to enter this grant on SCH C, and how about QBI and SE tax if it is included. And how to put payer's info. Client used to be a driver in 2019 before Covid-19 but for 2021 was not so does not have any Sch C for 2021.

[HOPE2]

Thanks for your explanation that they are useful. Not confusing for stimulus, I am confused if I enter this taxable grant on SCH C in line 1( I am  still trying to find out which line should be) QBI  and SE tax will be  populated. Am I right? or you do have any other idea to get rid of these forms. Note that client for 2021 does not have any SCH C. If I enter this amount on SCH C  I will certainly have QBI and SE tax. These are my questions. 

Really appreciate it.

[qbteachmt]

I don't know more ways to explain this is wrong: "but it is not as like as other business income since it is a grant."

It is Exactly like other business income, because that is what it is: Business Income.

Stop thinking that the word Grant makes any difference, unless you find this specific Grant Purposes meets one of those exclusions that I give for examples, and then keep cautioning that you need to investigate if that matters to this client.

Because there are grants under these programs that are not taxable for Fed purposes.

These are Business Income funds. No different than if your client got paid as part of their doing business because that is how and why they qualified to be considered to be given the Grant Money.

"If I enter this amount on SCH C"

Line 1.

[qbteachmt]

"Note that client for 2021 does not have any SCH C."

If they got this money in 2021, they have a Sched C entry.

[HOPE2]

Perfect and thank you awesome community..

Is it included SE tax, Sch C worksheet asks us "ALL INCOME SUBJECT TO SE TAX"? If no, how to adjust SE tax to zero for these grants.

Also, which line on Schedule C should be entered for this taxable grant?

Still confusing to find a way how to enter this 1099-G in client return.

If client have not have SCH C for 2021, can I consider this 1099-G for OTHER INCOME?

[qbteachmt]

Once again:

They have a Sched C for 2021, if they got this money in 2021, because this is Business Income.

Like regular business income. Which makes it the same as business income. Because it is Business Income. The same as Doing Business and getting paid.

Which means it is subject to SE tax.

It goes on Line 1 for the Sched C, where you put business income.

The Client needs you to include Sched C, because this is Business Income.

[HOPE2]

Appreciate it.

How about Payer's info.

I am new in Proseries

[qbteachmt]

There is no provision to link that 1099-G box 6 to the Sched C.

Pretend you have no 1099-G for this grant.

Put that grant amount into Line 1 of Sched C.

Your taxpayer has Business Activity for 2021 to report.

[kcliquidation916]

hello my name is [removed]

[kcliquidation916]

hello [removed]. i got the email from lendistry but i was wondering how we can give them the business banking information? please any help would be appreciated

[abctax55]

@kcliquidation916

This is a forum for professional tax preparers.

We have NOTHING to do with Lendistry.

If you want money from them I suggest you contact them directly.

Edit... AND this is a public forum where hackers can google your name, get a ton of info about you and then call to scam you. You should delete your full name, tho your handle provides enough info to get them started.

[Click]

qbteach, you deserve a medal for patience. Heh.

[qbteachmt]

Teaching helped me understand that not everyone hears what you say, the first time you say it; so, keep saying it different ways.

🏅