The IRS recently released several revenue procedures to provide clarity around the tax treatment in connection with forgiveness of Paycheck Protection Program (PPP) loans. The issues addressed by the IRS are threefold:

•  Timing issues: Taxpayers may treat PPP income as received or accrued when any of the conditions are met: (1) expenses eligible for forgiveness are paid or incurred; (2) an application for PPP loan forgiveness is filed; or (3) PPP loan forgiveness is granted. This provides a wide range of options and allows for all likely scenarios.

•  Allocation issues: Partners and partnerships may allocate their distributive share of PPP loan forgiveness tax-exempt income, the related deductions and make corresponding adjustments to the partners’ bases in their partnership interests.

•  Amended returns: The IRS allows partnerships to file amended Forms 1065 and issue amended Schedules K-1 for the above purposes for tax years ending after March 27, 2020. These amended returns and Schedules K-1 must be filed or furnished on or before December 31, 2021.

For more information on these Revenue Procedures: https://www.journalofaccountancy.com/news/2021/nov/irs-guidance-ppp-loan-forgiveness.html

You still have time to significantly reduce this year’s business federal income tax bill even with all the uncertainty about proposed tax law changes. Here are five possible moves to consider — but stay tuned for developments. Congress is currently considering some major tax changes. If approved, it’s unclear when they will all take effect.     (more…)

With year end rapidly approaching, it’s time to consider making some moves that will lower your 2021 federal income tax bill — and potentially position you for future tax savings. Unfortunately, tax planning is particularly challenging this year, because the tax rules for 2022 aren’t yet certain. In fact, they may not even be certain for 2021.

Here are nine planning tips for you to consider making before year end. But you also may want to be ready to take last-minute corrective actions if Congress works out a deal on the Build Back Better Act and the Bipartisan Infrastructure Bill before year end.

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WHAT’S THE BRIEF?
Companies that report under generally accepted accounting principles (U.S. GAAP) will be required to recognize leases as right-of-use (ROU) assets on the balance sheet and liabilities for those assets. Leased assets include both real and personal property with lease terms of one year or more. The result will be higher valued assets and additional liabilities recorded after adoption. For companies that are lessors of real and personal property, the accounting remains largely unchanged under the new standard. (more…)

In many areas, residential real estate markets have surged, and some are still surging. In these sellers’ markets, big home-sale gains are likely. That’s great news if you’re a seller — but will you owe taxes on the profit? (more…)

So far, 2021 has been a rough year for casualty losses. Hurricane Ida wreaked havoc in the south and east. Wildfires have destroyed millions of acres in the west. Catastrophes in other parts of the country this year — including tornadoes, earthquakes and floods — have caused significant damage to personal property. (more…)

Through September 30, 2021, employers can offer emergency paid sick leave for COVID-19 related reasons under the American Rescue Plan Act of 2021 (the “Rescue Plan”). The “Rescue Plan” grants tax credits to employers with 500 or fewer employees who voluntarily elect to provide qualified employees with emergency paid sick leave (EPSL) or expanded FMLA (EFMLA) leave for COVID-19 related reasons. (more…)

With autumn coming up in a couple months, it’s time to think about “harvesting” capital gains or losses from sales of securities. In addition, unfavorable tax law changes proposed in President Biden’s American Families Plan (AFP) may create an added sense of urgency for some taxpayers. (See “Proposed Tax Law Changes” at bottom of article for details.) (more…)

Do you own a vacation home? If so and you rent it to third parties, you may be confused about the federal income tax rules that apply. Confusion is especially common if you changed your usage pattern during the pandemic. It may have caused your property to be classified as a personal residence — rather than a rental property — for federal income tax purposes. (more…)

Child Tax Credit 2021: Eligible or Opt-Out? 

Many Americans received their first advance payments from the child tax credit program on or around July 15, 2021. These payments were passed as part of the American Rescue Plan as an advance on the child tax credit for the 2021 tax year. However, some recipients may be surprised to learn they may not be eligible for the payments already received because of changes in taxable income for 2021 or children who turned 18 during 2021. (more…)