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MEMBER OF ALLINIAL GLOBAL, AN ASSOCIATION OF LEGALLY INDEPENDENT FIRMS © 2020 Wolf & Company, P.C.
What You Need to Know:
PPP Loan Forgiveness
Accounting & Tax Considerations
May 6, 2020
• Today’s presentation slides can be downloaded at
www.wolfandco.com/webinars/2020
• The session will last about one hour
• Our audience will be muted during the session
• Please send your questions in using the “Q & A” box located at the
bottom of your screen
• For up-to-date and educational information on how the
COVID-19 pandemic is impacting businesses, please visit
Wolf’s COVID-19 Resource Center2
Housekeeping
About Wolf & Company, P.C.
• Established in 1911
• We offer Audit, Tax, Risk Management, and Business Consulting services in several industries,
including:
o Financial Institutions
o Healthcare
o Investment Management
o Manufacturing, Distribution, and Retail
o Technology
• Offices located in:
o Boston, MA
o Springfield, MA
o Albany, NY
o Livingston, NJ
• Over 250 professionals
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Presenters
RYAN P. BRUNELL, CPA, MSTPrincipal
Wolf & Company, P.C
Direct: (617) 933-3348
RYAN M. GORMAN, CPAPrincipal
Wolf & Company, P.C
Direct: (413) 726-6870
MICHAEL C. STRAVIN, CPA, MSTPrincipal
Wolf & Company, P.C
Direct: (617) 428-5404
DANIEL F. MORRILL, CPAPrincipal
Wolf & Company, P.C
Direct: (413) 726-6857
• Accounting for the loan
• Loan forgiveness
• Tax considerations
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Agenda
• No guidance established at this time
o Several alternatives being considered
• Current best practices
o Establish a liability for the proceeds
o Consider establishing either a:
− Separate bank account for the proceeds
− Separate general ledger account to track cash transactions
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Accounting for the Loan
• Covered period
o 8 weeks following disbursement of funds
• Costs eligible for forgiveness
o Payroll and related costs
o Mortgage interest
o Rent
o Utilities (electric, gas, water, transportation, phone, internet)
• 75% of loan forgiveness must be attributable to payroll and related costs
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Loan Forgiveness
Total loan forgiveness may be reduced if either:
• There is a reduction in your Full Time Equivalent Employee’s (FTEE’s) during the 8-
week covered period in comparison with reference period, as defined
o Forgiveness is reduced proportionately
• There is a reduction in wages on an employee basis
o Comparison of all employees with < $100K in wages in 2019 with most recent full
quarter that employee was employed
o For each employee whose wages decreased by more than 25%, there is a
corresponding decrease in forgiveness amount
• Rehiring employees
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Loan Forgiveness
• SBA has not yet published guidance on forgiveness
• Borrowers are required to provide lenders with documentation to support
the amount of the forgiveness request
• Best practices to prepare for forgiveness process
o Gather and maintain all documentation
− Payroll information
− Supporting invoices/cancelled checks
− Original agreements
o Maintain a tracking worksheet for all payroll costs
o Speak with your lenders on their specific requirements
• Lender perspective9
Loan Forgiveness
• What we know
o Any amount which would be includible in gross income of the recipient of a covered loan by
reason of forgiveness is excluded from gross income
o Notice 2020-32 - IRS has concluded that deductions associated with tax exempt income are
non-deductible
• Clarification needed
o Will Congress step in?
• Knock-on implications
o Payroll tax deferral
o Carryback of net operating losses – 5 years
o Modification of limitation on use of excess business losses
o State tax conformity
o Basis considerations10
Tax Implications of Forgiveness
Contact Us
RYAN P. BRUNELL, CPA, MSTPrincipal
Wolf & Company, P.C
Direct: (617) 933-3348
RYAN M. GORMAN, CPAPrincipal
Wolf & Company, P.C
Direct: (413) 726-6870
MICHAEL C. STRAVIN, CPA, MSTPrincipal
Wolf & Company, P.C
Direct: (617) 428-5404
DANIEL F. MORRILL, CPAPrincipal
Wolf & Company, P.C
Direct: (413) 726-6857
If you have further questions, please
send them to [email protected].
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We also invite you to explore
Wolf’s COVID-19 Resource Center
for up-to-date information.