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PPP: No deduction for forgivable expenses? Not so fast.

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Level 15

Just yesterday, the Treasury and the IRS issued Rev. Rul. 2020-27 and Rev Proc. 2020-51 to (1) reiterate its position on the disallowance of expenses that are otherwise deductible but which the taxpayer reasonably expects to be forgiven under PPP and (2) provide safe harbors and procedures for unforgiven expenses to be deducted.

Today, Senate Finance Committee leadership issued a statement to criticize the Treasury for issuing guidance that is contrary to Congress' intent and request that the position be reconsidered (https://thehill.com/policy/finance/526786-grassley-wyden-criticize-treasury-guidance-concerning-ppp-...)

With the Treasury relying on what is in the CARES Act, let's hope the bipartisan Small Business Expense Perfection Act (https://www.congress.gov/bill/116th-congress/senate-bill/3612/text) will get some traction to add the much needed texts to realign the letter with the spirit of the law.

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Still an AllStar
17 Replies 17
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Level 15

Sure would be nice to get this clarified sooner than later - it's making year-end tax planning a wee bit difficult...

Former Chump... umm.... AllStar.
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Level 11

Revenue rulings don’t come from Treasury, and don’t bind taxpayers or the courts. They merely state the position of the Internal Revenue Service as to how the law should apply to a particular set of stated facts.

That’s the message from the Finance Committee, whose chairman Senator Geezerley is sick at home with Covid-19. Nothing is going to get enacted soon. Maybe we will have some law by the July 15 filing date next year.

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Level 15

@BobKamman wrote:

Revenue rulings don’t come from Treasury, and don’t bind taxpayers or the courts. They merely state the position of the Internal Revenue Service as to how the law should apply to a particular set of stated facts.

That’s the message from the Finance Committee, whose chairman Senator Geezerley is sick at home with Covid-19. Nothing is going to get enacted soon. Maybe we will have some law by the July 15 filing date next year.


Technically, it's the IRS that issues revenue rulings but we all know why it's always formally communicated that these are issued by the Treasury and the IRS.

Yeah, these are not binding to taxpayers and the courts (especially with your view that courts no longer give much deference to revenue rulings) but I wonder how many plan to take a contrary position, include a 8275 (or -R) for disclosure, and perhaps be prepared to fight that out in court.

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Still an AllStar
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Level 11

Treasury issues and announces Regulations.  Announcing Revenue Rulings is an aberration that has only widely appeared in the last four years, with acting or puppet IRS Commissioners just following orders.  

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Level 13

"whose chairman Senator Geezerley is sick"

Fortunately, Sen. Grassley is doing well.

"But Grassley and Wyden said in their statement that the new guidance, along with the guidance issued earlier this year, goes against lawmakers' intention that small businesses receiving PPP loans be able to take deductions for ordinary and necessary business expenses.

“Regrettably, Treasury has now doubled down on its position in new guidance that increases the tax burden on small businesses by accelerating their tax liability, all at a time when many businesses continue to struggle and some are again beginning to close," the senators said. "Small businesses need help maintaining their cash flow, not more strains on it."

Because some people have a job to do and are going to do it, even when they are sick. I give that a bit of respect, personally.

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"Level Up" is a gaming function, not a real life function.
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Level 15
Level 15
Are they pushing the due date to July again?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 15

@Just-Lisa-Now- If anything, maybe something like a late extender, which will still not be ideal.  Pushing back the deadline?  Probably not.  It was authorized this year only on account of the pandemic being federally declared a disaster.

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Still an AllStar
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Level 11

If you haven't noticed, the pandemic is worse now than it was then -- and even if a vaccine that reduces U.S. deaths to only a million people is approved soon, it won't be widely available for months.  IRS won't have caught up on 2019 returns by April 15, much less prepared for another tax season.  

There were 573 Covid deaths during the March week when IRS extended the deadline.  Last week there were 5,600.  If you are the Commissioner, with new bosses, what are you going to do?

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Level 15
Level 15

right, but its not taking us by surprise now, people have time to plan ahead and meet the April 15th due date or utilize the 4868 if they cant make it in time.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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Level 15

Bob - but all of those folks that are much, much smarter than me said the pandemic would be over after the election.  I thought the election was over, but then again maybe it isn't really going to be over until we get that final press conference from Four Seasons Total Landscaping.  That does give me a good idea for a new promotion this year.  All clients are going to get a roll of green with every tax return we prepare --------- a nice bright green roll of sod.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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Level 15

I must admit that I am a hopelessly optimistic, glass-half-full, kinda guy.  I was told I'd live healthier and longer this way... wait a minute, perhaps, even this too is too optimistic.

But then again, I can't (bear to) imagine what life would be like if I lose that little bit of optimism - it's that glimmer of hope that gets me through the year, looking forward to my wishes coming true at the end of each year, with the joyful holiday season of Christmas!  And that's why I try to stay a good boy, hoping that Intuit Santa will grant me my Christmas wishes.

So, don't someone come tell me there's no Intuit Santa and that all the fixes and improvements I have dreamed about all year long are just wishful thinking, which will never come true! 😉

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Still an AllStar
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Level 15

There is no Intuit Santa.  However, if it will make you feel better, there is an Intuit Krampus.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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Level 15

@IRonMaN wrote:

...there is an Intuit Krampus.


Thank you, @IRonMaN!  I'd take the last bit about Intuit Krampus and ignore everything before that.  At least you confirmed something is real and since I've been a good boy, I shouldn't be afraid of Intuit Krampus.  Or should I? 🤣

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Still an AllStar
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Level 15

It's the Intuit Krampus.  Everyone should be afraid ------------ very, very afraid 😱

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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Level 11

@IRonMaN 

It's not the Intuit Krampus we have to worry about, it's the IRS Kraken.  The legendary sea monster that rises up and grabs you with pieces of paper containing opinions. 

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Level 11

@IRonMaN  All clients are going to get a roll of green with every tax return we prepare --------- a nice bright green roll of sod.

All my clients are getting a tube of fast-drying hair dye.  If they are bald, they get a copy of The Decline and Fall of the Roman Empire.  

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Level 15

@BobKamman  I see you dropped the shirt garter idea in favor of the hair dye.  Not a bad choice based on the warmer weather where you are at.  But there is something to be said about never having to worry whether or not your shirt is tucked in.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.
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