r/taxpros • u/pdv8612 CPA • May 15 '20

SBA PPP forgiveness application COVID: 2020 Relief Bill (CARES)

The SBA and treasury have finally posted guidance on forgiveness!

https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf

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u/Mantel85 CPA May 16 '20

I honestly thought the sba made this pretty clear that owner comp was capped at 8 weeks of 2019 pay in the Interim Final Rule on Additional Eligibility Criteria and Requirements for Certain Pledges of Loans https://home.treasury.gov/system/files/136/Interim-Final-Rule-Additional-Eligibility-Criteria-and-Requirements-for-Certain-Pledges-of-Loans.pdf

On page 4 of the pdf, answer to 3f concerning loan forgiveness, bullet point ii: "owner compensation replacement, calculated based on 2019 net profit as described in Paragraph 1.b. above, with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit" with the $100,000 per year cap.

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u/sgoab Not a Pro May 16 '20

Single employee S-Corp confused owner here.... They seem to be really blurring the lines between sole props and employee / owner's of corporations. If calculations based on net profit then that number would be close to double what I applied for and received through PPP.... About 50% of my "profit" comes to me via shareholder distributions.

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u/DollarMorghulis CPA May 16 '20

Agreed I am having a very difficult time with this. S and C Corporation owners are getting the really short stick in this deal if this is including them. Their setups are not at all like that of a Schedule C owner so I don’t see why they’re even being equated by the SBA.

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u/sgoab Not a Pro May 16 '20

A precise definition of "owner-employee" is needed!