Tax Alerts and Newsletters
Tax Alerts
October 23, 2020
Tax Briefing(s)

The Small Business Administration (SBA), in consultation with the Department of the Treasury, is providing this guidance to address borrower and lender questions concerning forgiveness of Paycheck Protection Program (PPP) loans, as provided for under section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as amended by the Paycheck Protection Program Flexibility Act (Flexibility Act).


Dear Client,

The SBA has issued a new set of Frequently Asked Questions (FAQs) and a new Interim Final Ruling as of August 11, 2020.  The new FAQs are grouped by relevant topic, including: 1) General Loan Forgiveness, 2) Loan Forgiveness Payroll Costs, 3) Loan Forgiveness Nonpayroll Costs, 4) Loan Forgiveness Reductions, and 5) Economic Injury Disaster Loan FAQs.  We have highlighted a few topics that are discussed within this most recent guidance.  Please see the attached pdf, which is bookmarked for ease of navigation. 

Is a Borrower required to make payments on a PPP loan if their intention is to apply for forgiveness?

If a Borrower submits their loan forgiveness application within 10 months of the completion of the elected Covered Period, they are not required to make any payments until the forgiveness amount is remitted to the lender by the SBA.  If the loan is fully forgiven, they are not responsible for any payments.  If only a portion of the loan is forgiven, or if the forgiveness application is denied, any remaining balance due plus accrued interest since the inception of the loan is payable by the borrower on or before the loan’s maturity date.

What health insurance and retirement benefits can be included in payroll costs eligible for forgiveness?

Group health care benefits and retirement benefits which are considered payroll costs eligible for loan forgiveness cannot include benefits accelerated from periods outside of the elected Covered Period.  Only the portion of payments made by the borrower for coverage during the applicable Covered Period or Alternative Payroll Covered Period are eligible for forgiveness.  Only employer contributions (and not employee contributions) are eligible.  Group health care benefits may include vision and dental insurance. 

For owner-employees of C Corporations and S Corporations, retirement benefits are further limited to 2.5 out of 12 months’ worth of 2019 employer retirement plan contribution made on behalf of the owner-employee (this amount does not get factored into the cash compensation cap of $15,385 for the 8-week Covered Period or $20,833 for the 24-week Covered Period).

For owner-employees of S Corporations, group health care benefits are not allowed for any owner of 2% or more of the stock or any employee who is a family member of a 2% or more owner.

Clarification on certain nonpayroll costs eligible for forgiveness:

  • Interest on unsecured credit is not eligible for loan forgiveness, even though it is a permissible use of PPP loan proceeds. Only payments on business mortgages on real or personal property (such as an auto loan) are eligible for forgiveness.
  • Payments made on recently renewed leases or refinanced mortgages are eligible, so long as the original lease or mortgage existed prior to February 15, 2020.
  • Covered utility costs under the transportation category include payments for “transportation utility fees assessed by state and local governments” (i.e. fees for local bus streetcar or light rail services incurred by the borrower).

Clarification on the FTE head count reduction safe harbor:

In earlier guidance, the SBA stated that a borrower could exclude an employee from the FTE reduction if the employer made an offer to rehire and the employee declined the offer.  Under new guidance, the borrower must now document in good faith each of the following:

  1. The borrower is unable to rehire individuals who were employees on February 15, 2020;
  2. The borrower is unable to hire similarly qualified individuals for unfilled positions on or before December 31, 2020;
  3. The borrower has informed the applicable state unemployment insurance office of any employee rehire rejections, within 30 days of receiving the employee’s rejection.

Clarification on what employees are included in the FTE head count test and the salary and wage reduction test:

When calculating the FTE head count test, the borrower must include all employees, including those who made more than $100,000 in 2019.  Only the salary and wage reduction test should exclude employee who were paid more than $100,000 at any time during 2019.

The SBA provides several examples of the FTE head count test and the salary and wage reduction test within the new FAQs (see attached).

What compensation is taken into account in determining any forgiveness reduction due to salary and wage reduction?

Only salaries and wage rates are taken into account for purposes of the salary and wage reduction test.  Reductions in bonuses, commissions, lost tips or benefits that otherwise constitute payroll costs for purposes of forgiveness are not included.

Will the SBA deduct the amount of any Economic Injury Disaster Loan (EIDL) advance from the PPP loan forgiveness?

Yes, any Economic Injury Disaster Loan advance will be deducted from the potential PPP loan forgiveness amount.  If the Economic Injury Disaster Loan advance exceeds the full amount of the PPP loan proceeds, then no amount of the PPP loan is eligible for loan forgiveness.

We will continue to monitor the PPP loan forgiveness guidance as it is released. Please contact us with any questions regarding your PPP loan.

Thank you,

Brimmer, Burek & Keelan, LLP

 

 


Dear Client,

 

Congress has passed a five week extension of the Paycheck Protection Program as of July 1, 2020.  This new bill extends the application period for businesses to apply for PPP funding through August 8, 2020.  The bill is expected to be signed by President Trump in the near future.

 

In addition, the SBA has released new Interim Final Rulings and updated FAQs to clarify some of the loan forgiveness rules and procedures amended in the Paycheck Protection Program (PPP) Flexibility Act.  This new guidance should be used in conjunction with the revised PPP Loan Forgiveness Application and Loan Forgiveness Application Form 3508 EZ.  We have summarized some of the highlights.

When may a borrower apply for loan forgiveness?

 

A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan—including before the end of the covered period—if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness.  If the borrower applies before the end of the covered period and has reduced any employee’s salary/wages in excess of 25%, the borrower must account for this reduction for the full 8-week or 24-week covered period, as applicable.

 

The borrower has 10 calendar months after the last day of the covered period before payments of principal and interest are required.  If the SBA determines that the loan is not eligible for forgiveness either in whole or in part, the PPP loan is no longer deferred and the borrower must begin making payments. 

What is the maturity date of a PPP loan?

 

If a PPP loan received an SBA loan number on or after June 5, 2020, the loan has a five-year maturity.  If a PPP loan received an SBA loan number before June 5, 2020, the loan has a two-year maturity, unless the borrower and lender mutually agree to extend the term of the loan to five years.

Loan forgiveness for owner-employees and self-employeed individuals - loan forgiveness for owner compensation is limited to either 8-weeks’ worth of 2019 compensation if using the 8-week covered period (up to $15,385 per individual), or 2.5 months’ worth of 2019 compensation if using the 24-week covered period (up to $20,833 per individual), in addition to the following:

  • C-corporation owner-employees - are capped by the amount of their 2019 employee cash compensation and employer retirement and health insurance contributions made on their behalf.

 

  • S-corporation owner-employees - are capped by the amount of their 2019 employee cash compensation and employer retirement contributions made on their behalf.  Health insurance is not included.

 

  • Sch C filers - are capped by the amount of their owner compensation replacement, based on 2019 net profit on Schedule C.  Retirement and health insurance contributions are not separately included.

 

  • General partners - are capped by the amount of their 2019 net earnings from self-employment (reduced by claimed 179 deductions, unreimbursed partnership expenses and depletion from oil & gas), multiplied by 0.9235.  Retirement and health insurance contributions are not separately included.

 

Certain independent contractors may be included in payroll costs - after further consideration, the SBA has decided that certain independent contractors or otherwise self-employeed individuals for federal tax purposes may be treated under the rules for general partners in a partnership if the relationship between the business and the independent contractor is analogous to a joint venture or partnership.  If this approach is taken, the independent contractor(s) cannot separately apply for or receive PPP loan forgiveness for their compensation.

 

For example, a fishing boat owner may hire crewmembers to contribute labor and resources to a common commercial fishing enterprise.  If the owner and crewmembers share in the enterprise’s profits, this is analogous to a joint venture or partnership and the rules for Payroll Costs for Partnerships will govern.  This would apply to similar cases where one or more partners in a partnership type of enterprise are treated as independent contractors.

Full Time Equivalency (FTE) Safe Harbor Clarification - borrowers are exempt from any loan forgiveness reduction based on a reduction in headcount if the borrower is unable to operate between Feb. 15, 2020 and the end of the covered period due to federal agency COVID-19 restrictions in addition to state and local government shutdown orders that are based in part on guidance from the federal agencies.

Lender Review of Loan Forgiveness Applications - a lender must issue a decision to the SBA on loan forgiveness no later than 60 days after receipt of a completed loan forgiveness application from the borrower.  The decision may be an approval (in whole or in part); denial; or denial without prejudice due to a pending SBA review of the loan.

 

We will continue to monitor the PPP loan forgiveness guidance as it is released. Please contact us with any questions regarding your PPP loan.

 

Thank you,

 

Brimmer, Burek & Keelan, LLP


Dear Client,

The SBA released a revised Paycheck Protection Program (PPP) Loan Forgiveness Application and Loan Forgiveness Application Form 3508 EZ, on June 16, 2020.  Please contact us for more information and instructions.  Some highlights are outlined below.  

Covered Period – borrowers with PPP loans disbursed prior to June 5, 2020 may elect to retain the original 8-week covered period, or alternatively use the new 24-week covered period.  Borrowers cannot use any number or combination of weeks between 8 and 24.  New borrowers will automatically receive a 24-week covered period.

The option still applies for borrowers with a biweekly (or more frequent) payroll to use an Alternative Payroll Covered Period, and the start date remains the first day of the first pay period following the PPP loan disbursement.

Payroll Costs Eligible for Forgiveness – include the following:

  1. Owner compensation replacement for any owner-employee or self-employed individual/general partner, not to exceed 2.5 months of 2019 compensation if using a 24-week covered period (capped at $20,833 per individual), or 8 weeks of 2019 compensation if using an 8-week covered period (capped at $15,385 per individual). 
  2. Up to $100,000 annualized pay per employee, not to exceed $46,154 per individual if using the 24-week covered period, or $15,385 per individual if using the 8-week covered period.
  3. Payroll costs must be equal to at least 60% of the total loan forgiveness amount.
  4. Payroll costs may not include employer contributions for employee health insurance for any self-employed individual, general partner or owner-employee of an S-Corporation.
  5. Payroll costs may not include employer contributions to employee retirement plans on behalf of self-employed individuals or general partners. 

Loan Forgiveness Application Form 3508 EZ Eligibility – borrowers are eligible to use the more streamlined Form 3508 EZ for their loan forgiveness application if they can attest to at least one of the following:

  1. Borrower is self-employed or a sole proprietor and had no employees at the time of the original PPP loan application and did not include employee salaries in their computation of average monthly salary.
  2. (i) Borrower did not reduce the annual salary or hourly wages of any employees by more than 25 percent during the covered period compared to the base line period or restored salary or hourly wage levels by December 31, 2020, and (ii) Borrower did not reduce the number of employees or the average paid hours of employees during the applicable periods, or qualifies for one of the FTE reduction exceptions or FTE safe harbors below. 

Full Time Equivalency (FTE) Reduction Exceptions – any FTE reductions in the following cases do not reduce the borrower’s loan forgiveness.

  1. Borrower made a good-faith written offer to rehire an individual who was employed on Feb. 15, 2020, which was rejected, and the borrower was unable to hire similarly qualified employees for unfilled positions on or before Dec. 31, 2020.
  2. Borrower made a good-faith written offer to restore any reduction in hours, at the same salary or wages, and the employee rejected the offer.
  3. Any employees who were fired for cause, voluntarily resigned, or voluntarily received a reduction of hours during the covered period. 

Full Time Equivalency (FTE) Safe Harbors – Two separate safe harbors exempt certain borrowers from any loan forgiveness reduction based on a reduction in headcount.

  1. Borrower is unable to operate between Feb. 15, 2020, and the end of the covered period at the same level of business activity as before Feb. 15, 2020, due to compliance with requirements/guidance issued between March 31, 2020 and Dec. 31, 2020, by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.
  2. Borrower reduced its FTE levels between Feb. 15, 2020 and April 26, 2020, and restored its levels no later than Dec. 31, 2020.

Document Retention – a borrower must retain all documentation in their files for six years after the date the loan is forgiven or repaid in full.  This documentation should support the original loan application and the loan forgiveness application, including documentation supporting any FTE reduction exceptions or FTE safe harbors that are claimed by the borrower.

We will continue to monitor the PPP loan forgiveness guidance as it is released. Please contact us with any questions regarding your PPP loan.

 

Thank you,

 

Brimmer, Burek & Keelan, LLP

 

 


Dear Client:

The Small Business Administration (SBA) has extended the safe-harbor repayment date to May 14, 2020 for returning Paycheck Protection Program (PPP) funds. This was added as Question 43 in the FAQs (see below) to the PPP loans on May 5, 2020.

This provides additional time for borrowers to carefully review the required certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”  A borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by the May 14, 2020 will be deemed by SBA to have made the required certification in good faith. 

Prior to May 14, 2020, the SBA intends to provide additional guidance on how it will review a borrower’s certification. Borrowers should review and document their loan eligibility as of the date of the application, considering current business activity and the ability to access other sources of liquidity as discussed in Question 31 of the FAQs.

Sincerely,

 

Brimmer, Burek & Keelan LLP  

Payroll Protection Program Loans - Frequently Asked Questions (FAQs)

  1. Question:  FAQ #31 reminded borrowers to review carefully the required certification on the Borrower Application Form that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”  SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.  Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date? 

Answer:  SBA is extending the repayment date for this safe harbor to May 14, 2020.  Borrowers do not need to apply for this extension.  This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.  SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.


Dear Client,

 

President Trump signed the Paycheck Protection Program and Health Care Enhancement Act (“Enhancement Act”) on April 24th. This legislation infuses $310 billion into the Paycheck Protection Program (“PPP”) with more than $250 billion in unrestricted funds for the program and an additional $60 billion allocated specifically for smaller lending institutions.

 

Numerous recent headlines have shown the spotlight on the distribution of the first round of PPP funds to large restaurant chains including Shake Shack, as well as other prominent public and private companies. Many have questioned the propriety of the eligibility requirements and impugned the integrity and ethics of many organizations that have applied for funding. The decision by Shake Shack to return the $10 million it received from the PPP, as well other prominent companies to do likewise, has drawn attention to the perceived inequitable distribution of PPP proceeds.

As you may remember, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provided a $2.2 trillion stimulus package that allocated funding to small businesses through new and enhanced loan programs administered by the Small Business Administration (“SBA”). The PPP was one such program designed specifically to provide eligible small businesses immediate relief if they believe that current economic uncertaintyof the COVID-19 pandemic makes such a loan for their business necessary to support their ongoing operations, and were willing to certify to the lender to that affect. 

Offering funds covering up to eight weeks of payroll, the program’s purpose is to reduce the growth of unemployment, help small businesses retain employees, and enable them to rebound quickly once the pandemic is under control. Unfortunately, the initial guidance promulgated by the SBA did not provide any definition or specifics regarding the nature or extent of the required impact to operations or the “current economic uncertainty” that would make the loan request “necessary to support ongoing operations.” In addition, since the PPP loan has a forgiveness component if a business meets certain conditions, the program has been touted by many as “free money.” Consequently, demand for PPP loans has been unprecedented, exceeded loan availability, and resulted in the SBA having to stop accepting PPP loan applications on April 16.

On April 23rd, the SBA updated its Frequently Asked Questions Document to add FAQ 31 (below). The new FAQ provides much-needed clarity regarding program qualifications specific to businesses with access to other sources of liquidity to support their ongoing operations. Any business that received a PPP loan prior to the issuance of this new guidance and who now believes that they do NOT demonstrate the necessity for the loan, can repay the loan in full by May 7, 2020. Any business that does so, will be deemed by the SBA to have made the required good faith certification on their PPP loan application. 

We certainly understand that there has been a justifiable rush for eligible small businesses to expedite processing of these loans and you may be primed to submit your PPP application, but we do want to caution you as to the potential risks of receiving these funds as these loans will be subject to regulatory and public scrutiny. Loan recipients will not remain anonymous as EINs will be made public. We anticipate heightened government scrutiny will be forthcoming to investigate potential fraud and abuse. Businesses who have received PPP loans and are later found to have not qualified under the eligibility rules and/or businesses who do not use the funding in accordance with the terms of the program, could be subject to significant legal or regulatory consequences. Further, businesses may experience reputational damage for having pursued these loans. 

Given the revised guidance issued by the SBA and the pending May 7, 2020 deadline for returning loan proceeds, we strongly encourage you, your organization’s management, and board of directors to carefully and immediately review your company’s financial situation and reconsider the relief you may have already received with a PPP loan. Specifically, consider whether your circumstances fall within the spirit and intent of this economic relief program. If you do receive and keep PPP funding, it is critical that you maintain complete and accurate documentation to support your eligibility for such funding, the specific use of these funds, as well as your qualifications for forgiveness under the terms of the program. This documentation will be crucial were your business to be audited and/or investigated. This defensive documentation will greatly minimize your potential exposure to fraud and abuse allegations related to your participation in this loan program.

Many of the factors influencing whether you qualify or should apply for these loans are organization specific. We encourage you to consult with legal counsel if you have questions regarding your organization’s eligibility to receive funds.

We recognize that these are difficult times and we remain committed to supporting you. If you would like our assistance with evaluating whether the PPP or other small business loan programs and/or economic relief measures are appropriate for you, please contact us.

Sincerely,

 

Brimmer, Burek & Keelan LLP

 

PAYCHECK PROTECTION PROGRAM LOANS Frequently Asked Questions (FAQs)

  1. Question: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?

Answer: In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary.

Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.

Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.

 

  1. Question: Do businesses owned by private companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?

Answer: See response to FAQ #31.

 

  1. Question: Will SBA review individual PPP loan files?

Answer: Yes. In FAQ #31, SBA reminded all borrowers of an important certification required to obtain a PPP loan. To further ensure PPP loans are limited to eligible borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. Additional guidance implementing this procedure will be forthcoming.

The outcome of SBA’s review of loan files will not affect SBA’s guarantee of any loan for which the lender complied with the lender obligations set forth in paragraphs III.3.b(i)‐(iii) of the Paycheck Protection Program Rule (April 2, 2020) and further explained in FAQ #1.


RE: Paycheck Protection Program – New Interim Guidance

Dear Client,

The SBA has released its first response to the Paycheck Protection Flexibility Act via a new interim final ruling.  Below are some highlights surrounding the new guidance regarding the Paycheck Protection Program (PPP) loans.  The SBA will be issuing additional revisions to its interim final rules on loan forgiveness and loan review procedures in the near future.

Covered period – existing borrowers may elect to use the original 8-week covered period or the new 24-week covered period, ending on or before December 31, 2020.  New borrowers will automatically receive a 24-week covered period from the date of loan disbursement.

Loan application deadline – June 30, 2020 remains the last date on which a PPP loan application can be approved.

Loan deferral period – if a borrower submits a loan forgiveness application within 10 months after the end of the loan forgiveness covered period, they will not have to make any payments of principal or interest on the loan prior to the SBA’s approval for the forgiveness amount.  For example: if a loan is disbursed June 25, 2020, the 24-week period ends December 10, 2020, and the borrower has until October 10, 2021 before they must begin making payments.

Loan term – the loan maturity term is extended to 5 years for loans approved on or after June 5, 2020.  Lenders and borrowers may mutually agree to modify the terms of PPP loans approved prior to this date.

Loan forgiveness – 60% of the total loan forgiveness amount must be used for payroll costs.  If a borrower uses less than 60% of the loan for payroll costs, the borrower will still be eligible for partial loan forgiveness subject to the requirement that no more than 40% of the total forgiveness amount be spent on non-payroll costs (rent, mortgage interest, utilities, etc.)

Loan eligibility – a borrower is ineligible to apply for a PPP loan if an owner of 20 percent or more of the equity in the business has been convicted of any felony within the last year or specifically a felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance within the last five years.  This is a slight change from the previous eligibility requirements.

We will continue to monitor the PPP loan forgiveness guidance as it is released.  Please contact us with any questions regarding your PPP loan.

Thank you,

 

Brimmer, Burek & Keelan, LLP


Last month, the IRS announced that taxpayers generally have until July 15, 2020, to file and pay federal income taxes originally due on April 15. No late-filing penalty, late-payment penalty or interest will be due.  The IRS issued Notice 2020-23 on April 9, 2020 which extends more tax deadlines as discussed below.


Dear Client:

Right now, your highest priority is the health of those you love and yourself. If you have time to read about some non-medical but important matters related to the health crisis, here is a summary of IRS action already taken and federal tax legislation already enacted to ease tax compliance burdens and economic pain caused by COVID-19 (commonly referred to as Coronavirus). 

We have included below, an IRS News Release providing some key points regarding Coronavirus-related paid leave for workers and tax credits for small and midsize businesses. 


Dear Client:

We hope that you are keeping yourself, your loved ones, and your community safe from COVID-19 (commonly referred to as the Coronavirus). Along with those paramount health concerns, you may be wondering about some of the recent tax changes meant to help everyone coping with the Coronavirus fallout. In addition to the summary of IRS actions and earlier-enacted federal tax legislation that was previously sent, we now want to update you on the individual tax-related provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress’s gigantic economic stimulus package that the President signed into law on March 27, 2020.


Dear Client:

We hope that you are keeping yourself, your loved ones, and your community safe from COVID-19 (commonly referred to as the Coronavirus). Along with those paramount health concerns, you may be wondering about some of the recent tax changes meant to help everyone coping with the Coronavirus fallout. In addition to the summary of IRS actions and earlier-enacted federal tax legislation that was previously sent, we now want to update you on the business tax-related provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress’s gigantic economic stimulus package that the President signed into law on March 27, 2020.


The Treasury and IRS have issued guidance on the recent order by President Trump to defer certain employee payroll tax obligations on wages paid from September 1, 2020, through December 31, 2020. Under the guidance:


The IRS has released the 2020-2021 special per diem rates. Taxpayers use the per diem rates to substantiate the amount of ordinary and necessary business expenses incurred while traveling away from home. These special per diem rates include the special transportation industry meal and incidental expenses (M&IEs) rates, the rate for the incidental expenses only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method. Taxpayers using the rates and list of high-cost localities provided in the guidance must comply with Rev. Proc. 2019-48, I.R.B. 2019-51, 1390.


The Treasury and IRS have issued final regulations that limit the Code Sec. 245A dividends received deduction and the Code Sec. 954(c) exception on distributions supported by certain earnings and profits not subject to the integrated international tax regime created by the Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97). Proposed regulations and temporary regulations, issued on June 18, 2019, are adopted and removed, respectively.


Treasury has issued final and amended regulations on the rules for distributions made by terminated S corporations during the post-termination transition period (PTTP). These regulations apply after an S corporation has become a C corporation.


Final regulations clarify that the amount of the rehabilitation credit for a qualified rehabilitated building (QRB) is determined as a single credit in the year the QRB is placed in service. This is the case even though the credit is allocated ratably over a five-year period. The final regulations adopt without modification proposed regulations released earlier this year ( NPRM REG-124327-19).


The IRS has released final regulations that clarify the definition of a "qualifying relative" for purposes of various provisions for tax years 2018 through 2025. These regulations generally affect taxpayers who claim federal income tax benefits that require a taxpayer to have a qualifying relative.


The IRS has announced that Medicaid coverage of Coronavirus Disease 2019 (COVID-19) testing and diagnostic services is not minimum essential coverage for purposes of the premium tax credit under Code Sec. 36B.


The IRS has released guidance in the form of questions and answers with respect to certain provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), and the Bipartisan American Miners Act of 2019 (Miners Act).


Final regulations provide additional guidance on the base erosion and anti-abuse tax (BEAT) under Code Sec. 59A. The regulations also address certain aspects of the BEAT under Code Secs. 1502 and 6031.


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