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Fermented Strategies - PPP Shenanigans- Issue #24

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November 25 · Issue #24 · View online
Fermented Strategies - Craft Brewing Industry Newsletter
Its been a minute since we last sent out an email as the extended tax season reared its ugly head, but we are back on it now with some updates to share with you.

Some unfortunate news on PPP non-deductibility
The IRS decided to say Happy Thanksgiving to everyone that received a PPP loan that their expenses used towards the forgiveness are non deductible and that those non-deductible expenses have to be taken in 2020 regardless if your loan gets forgiven in 2020 or 2021. Basically, this means your PPP loan is effectively taxable income in 2020.
This is not ideal for two reasons. 1- Congress had always intended for the PPP loan forgiveness to be a non-taxable event. The IRS has now made it clear their interpretation due to prior tax court cases and precedent makes it taxable income. 2- The IRS also decided that since businesses that received the PPP loan and used the proceeds in 2020 for the intention of forgiveness should have this taxable income event happen in 2020, regardless when you get the loan forgiven.
The silver lining here is that is this forces the hand of Congress to act to pass a law to make the PPP loan forgiveness non-taxable. There is one bill in the Senate and two in the House that are to correct this issue with the IRS, so hopefully, Congress can act and we won’t have to worry about this being taxable income ever. I am not sure when this will happen, but it should happen in the near future.
CBMTRA Day of Action is coming on December 1, 2020
The Brewers Association is calling on brewers to join them on Tuesday December 1, 2020 for the CBMTRA Day of Action. This day is focused on contacting your House Rep and Senators to make the current federal excise tax rates permanent. The current $3.50 federal excise tax rate expires on December 31, 2020 and will go back to $7 per barrel in 2021.
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Have a very safe and Happy Thanksgiving from all of us at Lance CPA Group!
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