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PPP2: Are Your PPP1 Loans/Grants Included in “Gross Receipts?”

PPP2: Are Your PPP1 Loans/Grants Included in “Gross Receipts?”

ISSUE:

The “Taxpayer Certainty and Disaster Tax Relief Act of 2020 – as part of the Consolidated Appropriations Action, 2021 (CAA) – (enacted December 27, 2020) instituted another round of Paycheck Protection Program Loans/Grants.  Eligibility for PPP2 includes a 25% Reduction in gross receipts “test.”

SITUATION:

Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually. MBC’s Controller called to ask us about the “Second Draw Paycheck Protection Program (PPP2) loans that are currently be administered through local lenders.“You’ve already told us that ‘gross receipts’ for PPP2 purposes – when calculating whether we show the required 25% reduction – is basically ‘Form 990 accounting,’ correct?”  “Yes,” we answer.  “And, that information and guidance can be found on the SBA’s new document that was just released this week.  It can be found at:Second Draw PPP Loans — How to Calculate Revenue Reduction and Maximum Loan Amounts Including What Documentation to Provide (1.19.2021).pdf (sba.gov)  “Okay,” he says.  “What about our PPP1 loan that was forgiven.  Is that included in gross receipts?  And, if so, would we include it when we got the funds or when they were forgiven?” “Ahh, great question.  The short answer is no.  PPP1 funds and EIDL emergency advances/grants are not included in ‘gross receipts’ for the 25% reduction calculations.  So, that renders the ‘when’ question a moot point.”  “Cool,” they say.

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PPP2: Are Your PPP1 Loans/Grants Included in “Gross Receipts?”

Employee Retention Credit – Expanded – Extended

ISSUE:

The “Taxpayer Certainty and Disaster Tax Relief Act of 2020 – as part of the Consolidated Appropriations Action, 2021 (CAA) – (enacted December 27, 2020) amended and extended the Employee Retention Credit (ERC) that was included in the CARES Act.

SITUATION:

Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

The Accounting Team at DCC asked us to provide them with a brief description of the ERC and the changes made with the new tax legislation.  Here goes…

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2021 Mileage Rates

ISSUE:

The Internal Revenue Service has released the standard mileage rates for the coming year.
 

SITUATION:

Idaho Theological Seminary (ITS) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are not required to file Form 990 annually.

ITS’ Controller called to ask a common, yearly question for this time of year:

“Has the IRS published the 2021 standard mileage rates yet?”

“As a matter of fact, yes they have,” we answered.  “The rates are as follows:

Read More . . .

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PPP2: Are Your PPP1 Loans/Grants Included in “Gross Receipts?”

HEERF Student Grants Reported on Form 1098-T?

Through the Summer and Fall of 2020, the apparent IRS guidance was that student grants under the CARES Act Section 18004, Higher Education Emergency Relief Funds (HEERF), would be required to be reported on your 2020 Form 1098-T’s sent to students in January 2021.  The grants, it seemed, would only be reported in Form 1098-T, Box 5.  The IRS (on December 14, 2020) issued guidance that these payments would NOT be required to be included on the 2020 Form 1098-T – Hallelujah!

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PPP2: Are Your PPP1 Loans/Grants Included in “Gross Receipts?”

2020 Form 990-T Draft Instructions Released

ISSUE:

As we mentioned in September, the 2020 Form 990-T (draft) is organized differently from what we have seen annually since 1951.  Now, the IRS has released the draft instructions for the 2020 Form 990-T.

SITUATION:

Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

DCC’s CFO to ask if we’d heard any updates with regard to the draft 2020 Form 990-T and the new Form 990-T, Schedule A.

We told her that the IRS has recently released the draft 2020 Form 990-T instructions.  The “What’s New” section of the instructions reminds filers that “Mandatory electronic filing of the 2020 Form 990-T will begin in February 2021.”  In addition, the draft alerts filers that the Form 990-T has been “redesigned for tax year 2020.”  The instructions are 34 pages long and include three appendices (with Appendix A, Definitions).  Also, there is a set of “Reminders” on page 2 that should be closely reviewed.

The draft 2020 Form 990-T instructions can be found at . . .

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