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Replies: 24
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110%er [5121]
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For people who got PPP loans:
Sep 24, 2020, 12:59 PM
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I found out today that our PPP loan is considered taxable income by the IRS. Got to love the government. They get theirs no matter what.
Get ready for a huge tax bill because of your “tax free” loan...
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CU Medallion [67820]
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Re: For people who got PPP loans: I like Congress
Sep 24, 2020, 1:04 PM
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they exempt themselves from virtually any law the pass.
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110%er [8273]
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Re: For people who got PPP loans:
Sep 24, 2020, 1:09 PM
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If you used it the way it was intended, you should be able to get the majority of it forgiven, thereby tax-exempt.
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Scout Team [161]
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Re: For people who got PPP loans:
Sep 24, 2020, 1:12 PM
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No, whatever amount is properly used IS COUNTED as taxable income. The remaining portion, either unused or not properly used, must be repaid.
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All-TigerNet [12870]
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Re: For people who got PPP loans:
Sep 24, 2020, 5:12 PM
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Interesting...
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110%er [5121]
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Re: For people who got PPP loans:
Sep 24, 2020, 1:15 PM
[ in reply to Re: For people who got PPP loans: ] |
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The loan itself isn’t taxed but because of the “forgiveness” it’s considered taxable income. We’ll be paying income tax on the PPP money. I’ll have to take out a loan to pay the tax.
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110%er [5121]
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Re: For people who got PPP loans:
Sep 24, 2020, 1:47 PM
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Here’s an example with simple numbers:
Widget Corp is planning on having a year end taxable income of $50,000 (income - expenses). Their tax bill would be around $15,000.
They took out a PPP loan for $100,000 for payroll and expenses. Since this is considered taxable, Widget Corps taxable income goes up to $150,000. The new tax bill is around $45,000.
This isn’t what we expected. This isn’t what our banker or accountant expected. We knew it was too good to be true but businesses were desperate. If we had known ahead of time we wouldn’t have taken the loan in the first place.
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MVP [510]
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Re: For people who got PPP loans:
Sep 24, 2020, 2:35 PM
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Noodle, There is a real possibility that the gain from the loans forgiveness will be made tax free. Based upon everything that I have read it is still being debated for this to be enacted. My guess is you will not know anything about the final decision till after the election ( not trying to get political). My company received one and we will have some form of gain. Personally I have been planning on it being taxed but lets hope they tell the IRS to look at it differently.
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Recruit [85]
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Re: For people who got PPP loans:
Sep 24, 2020, 2:40 PM
[ in reply to Re: For people who got PPP loans: ] |
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So if Widget Corp had to paid the same payroll and expenses, it's income would have been -$50,000 and it would have gotten at tax credit for $15,000 for a net of -$35,000 for the year
But by taking the loan and paying the $45,000 in taxes you net $5,000
It's also hard to believe that Widget Corps would have netted 50k if they had cut payroll and expenses. Hard to make the same profit when cutting output.
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All-TigerNet [12870]
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Re: For people who got PPP loans:
Sep 24, 2020, 5:23 PM
[ in reply to Re: For people who got PPP loans: ] |
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Noodle, what am I missing in your example. It sounds like you'd be getting a loan for $100,000 and being asked to pay $30,000 back.
That sounds like a helluva good deal. Obviously, something has gone over my head.
Please verify or correct me.
TIA
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110%er [5121]
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Re: For people who got PPP loans:
Sep 24, 2020, 5:54 PM
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Well, let’s say I give you a $100,000 and tell you that as long as you follow certain directions it will be forgiven and you don’t have to pay any taxes on the loan. You agree and take the money.
Then about 6 months later I tell you, “oh yeah, you’ve got to give me $30,000 since I gave you that loan”.
Looks ok on paper but for businesses that were/are struggling through the pandemic it’s sort of a kick in the face.
Apparently some people have better CPA’/tax people than I do. Just had it out with my CPA.
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Orange Blooded [3362]
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Re: For people who got PPP loans:
Sep 24, 2020, 9:45 PM
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We took the loan knowing we may have to pay it back in full. If you took the loan believing it was 100% free, then you got bad info.
If you wouldn’t have taken a $100k loan that required only $30k to be paid back, then I’m under the impression the only alternative was to go out of business.
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All-TigerNet [12870]
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Re: For people who got PPP loans:
Sep 24, 2020, 11:14 PM
[ in reply to Re: For people who got PPP loans: ] |
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I understand your dilemma.
Hopefully you can get some relief.
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All-In [32650]
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My 2 responses - "Not surprising in the least" and
Sep 24, 2020, 1:40 PM
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my daggum chin is on the floor . . . . you have GOT to be kidding.
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Orange Blooded [4365]
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All-In [32650]
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This from July 24th - it has probably changed Fifty 11 times
Sep 24, 2020, 5:36 PM
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since then . . . . ? ? ? ?
Anything more current ?
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All-In [40929]
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I got one and turned around and
Sep 24, 2020, 3:16 PM
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Gave it back a week later after they kept sending me letters that the rules were changing. They gave a week to give it back with no penalties
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110%er [8273]
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Re: For people who got PPP loans:
Sep 24, 2020, 4:09 PM
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The forgiveness application, though complex is pretty fair in how it treats what was originally outlined in the application as forgivable. We've used it strictly on payroll, rent, and interest. And we've submitted our application for approx. 95% forgiveness. Lets say our tax rate is 33%, that means 67% of the forgiveness amount is a gift.
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All-TigerNet [12870]
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Re: For people who got PPP loans:
Sep 24, 2020, 5:11 PM
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Even so, still a good deal...right?
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110%er [5121]
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Re: For people who got PPP loans:
Sep 24, 2020, 5:40 PM
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Still a good deal on paper. Problem is that since we didn’t realize we’d be taxed this way I now have to come up with a gigantic pile of money to pay taxes that we didn’t know we had to pay. That’s not so easy to do considering how things have been since March.
It also means that I won’t be able to bring back the last of my laid off employees until sometime next year. Sucks for them. I’ll probably recommend to them that they go ahead and find another job.
I may just do like everyone else and lie on my taxes. Maybe just not pay them at all. Rich people get away with it so why not me?
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All-In [32650]
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I want to try that plan, too, Noodle. Knowing my luck - it
Sep 24, 2020, 5:44 PM
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will be the swiftest and most harsh penalty for tax evasion in the history of the ultraverse.
lol
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All-TigerNet [12870]
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Re: For people who got PPP loans:
Sep 24, 2020, 11:19 PM
[ in reply to Re: For people who got PPP loans: ] |
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Sorry buddy.
Maybe they'll work a deal so that you pay the tax over a period of years(hopefully with no interest).
??
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All-In [40929]
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LOL
Sep 25, 2020, 2:39 AM
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the IRS will never do anything no interest and no penalties
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110%er [8049]
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Serious question
Sep 24, 2020, 8:34 PM
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Does that also mean that the individuals and families that were sent money are going to have to count that as income too? Only seems fair.
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CU Guru [1260]
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No. The check was free of charge.***
Sep 24, 2020, 11:58 PM
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Replies: 24
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