Cares Act Tax Provisions: It’s Not Personal, It’s Business

1. COVID-19 UPDATE
WEBINAR SERIES
CARES ACT TAX
PROVISIONS:
“IT’S NOT PERSONAL, IT’S BUSINESS.”
CITRIN COOPERMAN WEBINAR
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Wednesday, April 15, 2020
12:00 – 1:30 PM
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PRESENTED BY: Allison Brack, Joe Bublé, Nichol Chiarella,
Paul Dailey, Will Fernandez, John Genz, Ronald Hegt, Mitzi
Hollenbeck, Shawn Howard, Michael Kline, Jaime Reichardt,
David Seiden, and Andy Tarquinio

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WELCOME / KEY REMINDERS / USING ZOOM
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• The webinar is 1.5 hours and based on your participation, you can earn up to 1.5 CPE
credits.
• You must reply to 4 polling questions to receive the full credit.
• Please join the webinar using your computer audio. You will join in listening mode only.
• You will have the opportunity to submit questions to our presenter by typing your
questions into the Q&A icon on the Zoom panel.
• Please complete the electronic course evaluation that will be launch at the conclusion of
the webinar.
• This session is being recorded and a link will be sent in a follow-up email.

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OPENING REMARKS
JOSEPH BUBLÉ, CPA
PARTNER- FIRM TAX PRACTICE LEADER
NEW YORK CITY OFFICE

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AGENDA
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TOPIC PRESENTER
Welcome and Introduction Joe Bublé
Bonus Depreciation on Qualified Improvement Property Paul Dailey
Amending 2018 & 2019 Business Tax Returns, Including Partnership Returns Shawn Howard
Change of Accounting Method Andy Tarquinio
State and Local Tax Implications David Seiden
Business Interest Expense Changes
Effect on C Corporation, S Corporation, and Partnership Returns
Michael Kline
New Net Operating Loss Carryover Rules Allison Brack
Effect of Cares Act on Accounting for Income Taxes John Genz
Effect on Individual Returns of Business Tax Provisions Ronald Hegt
Primer on Cancellation of Debt Rules Andy Tarquinio
Defer Payroll Taxes on PPP Loans Nichol Chiarella
SBA Loans/Next Wave
State and Local Tax Implications
Will Fernandez
Mitzi Hollenbeck
Jaime Reichardt
Closing Remarks Joe Bublé

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BONUS DEPRECIATION ON
QUALIFIED IMPROVEMENT
PROPERTY
PAUL H. DAILEY, CPA, MBA
PARTNER
NEW YORK CITY OFFICE

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BONUS DEPRECIATION FOR QUALIFIED
IMPROVEMENT PROPERTY
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• The 2017 TCJA allowed for 100% bonus depreciation
• Was supposed to apply to Qualified Improvement Property
(“QIP”) such as qualified leasehold, retail, and restaurant
improvements
• Glitch in law, however, precluded taxpayers from taking
advantage of this tax break
• CARES Act, however, provides the fix and corrects the error
• QIP is any interior improvement to nonresidential real property
• Must be an improvement to an existing building
• Can include nonstructural improvements to common areas of a
building

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BONUS DEPRECIATION FOR QUALIFIED
IMPROVEMENT PROPERTY, CONTINUED
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• The CARES Act makes QIP eligible for bonus depreciation
as 15 year recovery property (as compared to 39 years)
• Change is retroactive and effective to property placed in
service after December 31, 2017
• Refund potential thus is possible
• Interplay with Electing Real Property Trades or Businesses

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POLLING QUESTION #1evolution
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Are you a CPA?
a. Yes
b. No

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Shawn M. Howard
CPA, MST
PARTNER
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AMENDING 2018 AND 2019 BUSINESS TAX
RETURNS, INCLUDING PARTNERSHIP
RETURNS
SHAWN M. HOWARD, CPA, MST
PARTNER
BETHESDA OFFICE

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BIPARTISAN BUDGET ACT OF 2015,
CENTRALIZED PARTNERSHIP AUDIT REGIME
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• Applies to all partnerships starting with taxable years after December 31,
2017, unless election made to opt out
• BBA Partnership not eligible to “Amend” the partnership tax return and
provide amended K-1s
• Must file for an Administrative Adjustment Request. If the adjustment is
pushed out to the partners, the partners calculate the impact for the tax year
they are notified
• Opt out requirements – election made with return and notify partners
o 100 or fewer partners (looks through to S-Corp shareholders)
o Each partner is an individual, C-Corp, S-Corp, Estate of deceased
partners, Foreign Entity that would be treated as a C-Corp if domestic
o Ineligible partners – partnerships, trusts, disregarded entities, nominees,
Estates and Foreign entities not meeting the above qualification

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REV PROC 2020-23 – BBA RELIEF
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• Allows for amended tax returns for Eligible BBA partnerships to take into
account tax changes from the CARES Act, as well as other tax attributes
the partnership is entitled to by law
• Eligible Partnerships are those that filed Form 1065 and provided Schedule
K-1 prior to the issuance of the Rev Proc (April 8, 2020)
• Must amend before September 30, 2020
• Only applicable to partnership taxable years that began in 2018 or 2019
• Special provisions with respect to GILTI, partnerships under examination,
or those that previously filed an AAR
• Write on Form 1065 (“amended return” box checked) and K-1s “FILED
PURSUANT TO REV PROC 2020-23”
• Must analyze different filing options to address retroactive tax relief

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CHANGE OF
ACCOUNTING
METHODS
ANDY TARQUINIO, CPA
PARTNER
MELVILLE OFFICE

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RETROACTIVE CHANGE TO THE CLASSIFICATION
OF QUALIFIED IMPROVEMENT PROPERTY
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• Following the CARES Act being signed into law, the depreciation method used to
depreciate QIP on 2018 tax returns now becomes an “impermissible” (or incorrect)
method of accounting. In order for our clients to obtain the tax savings associated
with this change in law, we need to change from an impermissible method of
accounting for depreciation 2018 QIP to a “permissible” method of depreciating QIP.
Tax Cuts and Jobs Act The CARES Act
Recovery Period for QIP 39 years 1 year - bonus
Election out of “regular”
recovery period n/a 15 years
Electing Real Property
Trade or Business – ADS 40 years 20 years

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RETROACTIVE CHANGE TO THE CLASSIFICATION
OF QUALIFIED IMPROVEMENT PROPERTY, CONT.
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There are two ways to accomplish this:
Amending the 2018 tax return:
• Changing depreciation from 39 years to 1 year i.e. bonus depreciation, or
• Electing out of bonus depreciation and choosing to depreciate QIP over a 15 year period, or
• Changing ADS depreciation from 40 years to 20 years for electing real property trades or
business
Making Application for Change in Accounting Method on the 2019 tax return (IRS Form 3115)
• Accelerate the remaining 38 years of depreciation on the 2019 tax return, thereby claiming the
missed depreciation as a favorable IRC Section 481(a) adjustment, or
• Deducting the 2018 difference between 39 and 15 year depreciation on the 2019 tax return and
depreciating the remaining costs basis over 14 years beginning with the 2019 tax year, or
• Deducting the 2018 difference between 40 and 20 year ADS depreciation on the 2019 tax return
and depreciating the remaining costs basis over 19 years beginning with the 2019 tax year.

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AMENDING 2018 TAX RETURNS OR CHANGE IN
ACCOUNTING METHOD – CONSIDERATIONS
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• Your immediate needs for cash
• Different partners/shareholders in the 2018 and 2019 tax years
• Prior, current and future year’s taxable income
• Impact on your net operating loss position…i.e. carryback to a tax year that has a
higher tax rate thereby creating a permanent tax savings
• Business interest expense limitations
• Various international provisions
• Amending tax returns would be overly burdensome or too costly
Similar to what we experienced with recent Tax Reform, modeling of these and other
CARES Act changes will be critical

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IRS FORM 3115, APPLICATION FOR CHANGE IN
ACCOUNTING METHOD – THE BASICS
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• What is an accounting method?
• What are changes in accounting method and why are they so important
• Why does the IRS allow change in accounting methods
• Types of accounting method changes - Automatic and those requiring Advance
Consent from the IRS
• Required forms and filings for Automatic Changes –
o Changing from an impermissible (incorrect) method of tax depreciation to a
permissible (correct) method of tax depreciation is an automatic change in
accounting.
o Attach Form 3115 to the filer’s timely filed (including extension) federal tax return
for the year of change
o File a copy of the signed Form 3115 to the address provided in the instructions

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FINAL THOUGHTS
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• Although authority exists for making this change in accounting method, we spoke
with the IRS National Office about making this change and, on an informal basis,
they had the following to say:
• DCN 7 provides the way forward for making this accounting method change.
• The Service is considering all options that would serve to simply this process.
• In prior years, when Congress retroactively extended bonus depreciation, the IRS
issued guidance that generally allowed taxpayers to either file an amended return
or for a limited amount of time, file a Form 3115 (DCN 7 – Change from
Impermissible to Permissible Method of Accounting).
• The Service plans on issuing procedural guidance.
• Based on this history, it might be prudent to wait for procedural guidance from the
IRS related to the retroactive application of bonus depreciation to QIP and the
change in the ADS recovery period.

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FINAL THOUGHTS, CONTINUED
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Top Ten Most Common Automatic Method Changes
1. Depreciation method changes
2. Bonus compensation
3. Revenue Recognition and deferral of advance payments
4. UNICAP (Section 263A) methods
5. Tangible property regulations
6. Treatment of prepaid expenses.
7. Software development costs
8. Accelerated deduction for taxes
9. IBNR (including medical expenses from Workers Comp)
10. Other inventory changes

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SALT ISSUES
DAVID SEIDEN, CPA
PARTNER – SALT PRACTICE LEADER
NEW YORK CITY OFFICE

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CARES ACT AND STATE TAXES
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QUESTION:
What impact does the CARES Act have on state
taxes?

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CARES ACT AND STATE TAXES
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ANSWER:
It depends. 50 states – 50 possible answers.

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CARES ACT AND STATE TAXES
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“Depends” Factors:
•Version of Internal Revenue Code (“IRC”) adopted by state*:
•Rolling – Most Recent (23 States and DC)
•Static – Requires a change in state statute (21 States)
•Specific Provisions (3 States)
•Modifications to IRC Adopted:
•NOL’s
•Depreciation
•State Taxes
•Dividends Received Deduction
* For Corporate Tax

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POLLING QUESTION #2evolution
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States that have rolling IRC conformity (which includes states
like NY, CT, CO, MD, MA, RI, DC) have enacted all provisions
of the Act?
a. True
b. False

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NEW YORK STATE
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•Corporations (rolling conformity – with modifications)
oCARES Act Implications to NY:
Qualified Improvement Property
39.5 years to 15 years (same as federal)
NY does NOT permit bonus depreciation (IRC §168(k))
Potential refund/amended return due to shortened life of assets
IRC §163(j) - Interest Limitation
For tax years 2019 and 2020 NYS disallows the additional interest
expense provided by CARES Act re IRC §163(j)
 NOL – NY does NOT follow Federal NOL carryback/carryforward rules
No amended return/refund opportunity

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NEW YORK STATE
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•Individuals (rolling conformity – at least historically)
oNYS has specifically decoupled from the CARES Act provisions with
respect to individuals. Implications:
• NOL carryback NOT permitted in NY.
o Caution - It appears carrying back a federal NOL (NOT allowed in NY)
will result in losing the ability to use such NOL as a carryforward in NY.
• Modification required for excess business losses allowed (IRC § 461(l)(1)).
• Modifications from pass-through entities to adjust for additional deductions
provided for by CARES Act for QIP and IRC §163(j).

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CALIFORNIA
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•Individuals and Corporations:
•IRC Static Conformity - IRC as amended through
January 1, 2015.
o2017 TCJA not adopted by California.
Certain specific provisions were enacted.
oCARES Act not adopted by California.
California did enact the withdrawal penalty waiver for
distributions from qualified retirement accounts.
•California no longer allows for NOL carrybacks.

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CARES ACT AND STATE TAXES
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5 Key Takeaways
1. Each state is different.
2. Business and Individual answers (re CARES Act adoption) can be
different.
3. Rolling doesn’t mean full adoption.
4. States will be making statutory modifications over next 6 plus months.
5. Careful analysis of potential trade-offs of federal and state adoption of
CARES Act (e.g., New York NOL Carryback personal income taxes).

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OTHER COVID-19 SALT CONSIDERATIONS FOR
BUSINESSES
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•2019 Corporate, Personal, and Trust State Tax Return and Payment
Due Date Extensions
•2020 First and Second Quarter Estimated Tax Payment Due Dates
•Sales Tax Return Due Dates
•Property Tax Return Due Dates
•State Tax Withholding Return Due Dates
•Nexus from Employees Working From Home
•Statutory Residency – 183 day test

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BUSINESS INTEREST EXPENSE CHANGES
EFFECT ON C CORPORATION,
S CORPORATION, AND PARTNERSHIP
RETURNS
MICHAEL KLINE, CPA, MST
PARTNER
PHILADELPHIA OFFICE

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SEC. 163(J) UPDATE
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Cares Act Changes
• Increase limitation from 30% to 50% for years 2019 and 2020.
o Deduction is changed to sum of business interest income plus 50% of Adjusted
Taxable Income (ATI) and floorplan financing.
• Taxpayers may elect not to use the increased limitation.
• Taxpayers may elect to substitute their 2019 ATI for 2020 ATI for tax years
beginning in 2020.
o For Taxpayers that may have significantly reduced ATI in 2020.
• Allows for larger deduction in 2020.

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SEC. 163(J) UPDATE
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• Increase in ATI to 50% for years beginning in 2019, does not apply to partnerships.
o Only applies to years beginning in 2020.
o Partnerships may elect to use 2019 ATI in 2020.
• Partners may treat 50% of any excess business interest expense allocated to them
in a tax year beginning in 2019, as paid or accrued by the partner in the partner’s
first year beginning in 2020 and will NOT be subject to any limitations.
o The remaining 50% will be subject to limitations as usual.

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REVENUE PROC. 2020-22
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• Applies to electing real property trade or business and the election under Sec.
163(j)(7)(9).
• Section 4 of Rev Proc allows real property trade or businesses to make a late election
for years 2018, 2019, or 2020.
o Need to file amended return, amended 1065 or AAR.
• See Rev Proc 2020-23 regarding ability to file an amended 1065.
• Amended returns must be filed by October 15, 2021.
• Late election must be attached to amended return.
o Details of election in Section 4.04 of Rev Proc.

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REVENUE PROC. 2020-22, CONTINUED
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• Section 5 – Opportunity to Withdraw a Sec. 163(j)(7) election.
o Increased limitation.
o Technical correction for bonus depreciation on QIP.
• Could change depreciable life under ADS, even if election not made to withdrawal.
• Taxpayer must timely file amended income tax return, Form 1065 or AAR for the year
the election was made, with a withdrawal election.
• Amended return must be on or before October 15, 2021.
o See Rev Proc 2020-23 regarding ability to file an amended 1065.
o Withdrawal election described in Sec. 5.03 of Rev. Proc.

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NEW NET OPERATING LOSS
CARRYOVER RULES
ALLISON BRACK, CPA, MST
PARTNER
NEW YORK CITY OFFICE

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NEW NET OPERATING LOSS CARRYOVER RULES
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Section 2303 of CARES Act – Modifications for Net Operating losses
Changes:
• Losses arising in taxable years prior to Jan 1, 2021 can offset 100% of taxable income.
• Losses arising in taxable years beginning after Dec 31, 2017 and before Jan 1, 2020 can be
carried back 5 years.
Who can benefit immediately:
• Taxpayers with NOLs in 2018 or 2019
• Taxpayers who can create NOLs in 2018 or 2019 due to other changes made by the
CARES Act

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NEW NET OPERATING LOSS CARRYOVER RULES
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Loss Carryback Procedures
• Losses must be carried back to the oldest year in the carryback
period first.
• Losses can be carried back on Form 1045 (for individuals, trusts and
estates) or Form 1139 (for corporations) or on amended returns.
• Form 1045/Form 1139 must be filed within 12 months after the close
of the taxable year of the loss.

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NEW NET OPERATING LOSS CARRYOVER RULES
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Additional Guidance
Notice 2020-26
• The IRS grants a six-month extension of time to file Form 1045 or Form 1139 with respect to the
carryback of a net operating loss that arose in any taxable year that began during calendar year 2018
and that ended on or before June 30, 2019.
Rev Proc 2020-24
• Provides that the election to waive the carryback period in the case of a net operating loss arising in a taxable
year that begins after Dec. 31, 2017, and ends before Jan. 1, 2021 can be made on the 2020 tax return.
• Provides election to exclude Section 965 years from the carryback period.
• Provides election to use quick refund claim applications (Form 1045/Form 1139) for a taxable year that began
before Jan. 1, 2018, and ended after Dec. 31, 2017 if filed by July 27, 2020.

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JOHN C. GENZ, CPA, MST
PARTNER
NEW YORK CITY OFFICE
EFFECT OF CARES ACT CHANGES ON
ACCOUNTING FOR INCOME TAXES

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ASC 740 INCOME TAX ACCOUNTING
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Many items in the CARES Act may have income tax accounting implications
Such as:
• Changes to deferred taxes
• Changes to valuation allowances
• Balance sheet classification
• Impairments of assets and goodwill
• Inability to forecast due to economic disruptions
• CARES Act impact is included in the period of enactment (March 27, 2020)
• With the law enacted at the very end of a quarterly reporting period, management should
make its best estimate as to how it will treat these items based on information that is known or
knowable as of the balance sheet date
• Consideration should also be given to the state tax impact of the federal tax law changes in
the period in which the state laws are enacted

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NET OPERATING LOSSES (“NOL”)
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• Establishes five-year carryback of net operating losses (NOLs) generated after
12/31/17 and before 1/1/21. The 80% NOL limitation will not apply to losses
generated or utilized during this period.
• Federal and state NOL carrybacks may be a source of taxable income to
support realization of deferred tax assets (“DTA”).
• Since the Federal tax rate changed from 35% to 21%, it may require some
federal NOL DTAs to be re-measured to 35% discretely in the period of
enactment.
• Valuation allowances may no longer be necessary against NOL DTAs if
carryback opportunities are available as a result of the CARES Act and should
be recorded discretely in the period of enactment.
• Keep in mind credits originally claimed on prior returns (e.g., foreign tax
credits, R&D tax credits) may now be carried forward and require a valuation
allowance.

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SECTION 163(J) INTEREST EXPENSE LIMITATION
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• The current year federal and state tax effects resulting from the increased
adjusted taxable income (“ATI”) limitation and election to utilize 2019 ATI for
the 2020 limitation, should be reflected in the current year annualized
effective tax rate (“AETR”).
• Additionally, the federal and state income tax effect of changes in the prior
year ATI limitation should be accounted for discretely in the interim period
that includes the date of enactment, including changes in the valuation
allowance.
• Companies should also consider the international tax impact of the
increased ATI limitation, such as the impact on FDII, GILTI, and BEAT.

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ALTERNATIVE MINIMUM TAX REFUNDS
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• AMT credit carryovers may have been presented as a current or non-current
receivable or a DTA in the prior period balance sheet.
• The presentation of refundable AMT credits in the balance sheet should be
updated to reflect the timing of when the credits are expected to be utilized
from non-current receivable or DTA to a current receivable.

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QUALIFIED IMPROVEMENT PROPERTY (“QIP”)
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• The impact of the QIP technical correction on any position taken in a prior period
should be recorded discretely in the interim period that includes the date of
enactment.
• Companies may plan to file federal and state amended returns for prior periods to
claim a benefit, which could result in a refund receivable and a change in deferred
taxes.
• Companies should consider the potential rate impact of the QIP technical correction
if it creates or increases NOLs that can be carried back to a year with a 35% tax
rate.
• The technical correction constitutes new information that may allow for recognition of
an uncertain tax position taken in a prior period including reversal of interest or
penalties accrued for the tax position.

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INDEFINITE REINVESTMENT ASSERTION
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• Due to economic disruptions, companies will need to evaluate their indefinite
reinvestment assertion, for both historic and current earnings.
• Companies that do not assert indefinite reinvestment may be subject to other taxes on
those earnings, such as withholding taxes.
• Foreign currency translation adjustments related foreign withholding tax liabilities from
year to year are recorded through the income statement rather than as a cumulative
translation adjustment in equity.
• Companies that no longer assert indefinite reinvestment would also need to consider
potential deferred taxes related to unrealized foreign currency gains or losses on
previously taxed, but unremitted foreign earnings included in the toll charge.
• State taxes and changes in the law would also need to be considered when evaluating
the indefinite reinvestment assertion.

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GRANTS AND EMPLOYEE RETENTION CREDITS
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• There is no U.S. GAAP that specifically addresses the accounting by business entities
for government assistance. Companies will need to analyze the nature of the
assistance and look for available guidance on similar transactions to determine the
proper accounting treatment.
• For instance, the Paycheck Protection Program loans are classified as a loan until
potentially fully or partially converted to a non-taxable grant. If all or part of the loan is
converted to a non-taxable grant, this will be a permanent book to tax adjustment and
a discrete item in the reporting period of conversion, impacting the AETR.

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EFFECT ON INDIVIDUAL RETURNS OF
BUSINESS TAX PROVISIONS
RONALD HEGT, CPA
PARTNER
WESTCHESTER OFFICE

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FORM 1040-WHERE BUSINESS CHANGES MEET
INDIVIDUAL CHANGES
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Business changes that impact owner operated businesses or flow-through
interests:
• Bonus Depreciation
• Interest Expense Limits
• Excess Business Loss Suspension
• Net Operating Loss Carrybacks
Key Individual Changes
• COVID-19 based defined contribution plan distributions
• Required Minimum Distribution optional suspension for 2020
• Charitable Distributions for non-itemizers and itemizers

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FORM 1040-WHERE BUSINESS CHANGES MEET
INDIVIDUAL CHANGES
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Net Operating Loss Created—Carry Back or Forward?
• Prior Year Tax Rate-Regular or AMT?
• Potential Release of Credits to further carry back
• If no carryback, is 2020 a year to take RMD?
Trust Issues
• Same issues as Individuals, plus
• Amended K-1s to beneficiaries triggers amendments to beneficiary
returns

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POLLING QUESTION #3evolution
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Do you need CPE credit?
a. Yes
b. No

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PRIMER ON CANCELLATION OF
DEBT RULES
ANDY TARQUINIO, CPA
PARTNER
MELVILLE OFFICE

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CANCELLATION OF DEBT INCOME
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Basic Rules:
Because a borrower is obligated to repay borrowed funds, the cash received
from a loan does not represent taxable income. However, if the debt is
cancelled, in part or whole, or is settled at a discount, the difference in the
amount borrowed and the amount repaid results in cancellation of debt income
and is taxable unless an exclusion applies.
Transactions that can result in cancellation of debt income can include:
 Cancellation of debt by the lender
 Substantial modification of Debt
 Debt for debt exchanges
 Debt for equity exchanges
 Capital contributions to an insolvent company
 Acquisition of debt from the lender by a related party at a discount

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CANCELLATION OF DEBT INCOME
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Exceptions to COD Income:
• Lost deduction
• Purchase price modification
• Bankruptcy
• Insolvency
• Real Property Business Debt
• Qualified farm debt

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CANCELLATION OF DEBT INCOME
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Insolvency Exception:
• Cancellation of debt income is excluded to the extent the debt
discharge occurs when the taxpayer is insolvent
• Income excluded shall not exceed the amount by which the taxpayer
is insolvent
• Insolvency is computed immediately before the discharge
• Insolvency is defined as the excess of the taxpayers’ liabilities over
the fair market value of the taxpayer’s assets
• Contingent liabilities
• Taxpayers have the burden of proof that they are insolvent
• Must obtain a qualified appraisal at time of debt discharge
• Local tax assessment (in the case of real property) is not accepted

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CANCELLATION OF DEBT INCOME
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Attribute Reduction:
The relevant tax attributes of the tax payer and their order of reduction
is set forth as follows:
• Net operating losses
• General business credits
• Minimum tax credits
• Capital loss and capital loss carryovers
• Tax basis reduction of depreciable assets
• Passive activity loss and credit carryover
• Foreign tax credit carryover
• Required even if bankruptcy and insolvency exceptions apply
• Attribute reduction takes place on the first day of the following tax
year.

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CANCELLATION OF DEBT INCOME
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Special Rules for Pass-through Entities:
S-corporations:
• The test for insolvency takes place at the corporate level
• Attribute reduction takes place at the S-corporation level
• Suspended losses at the shareholder level are reduced to the extent
there is an exclusion of COD Income
• Any taxable cancellation of debt income increases shareholder’s
basis and AAA (if not excluded at corporate level)
• Any COD income excluded as the result of an exception applied at
the corporate level does not pass through to shareholders

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CANCELLATION OF DEBT INCOME
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Special Rules for Pass-through Entities:
Partnerships:
• Cancellation of debt income passes through to partners.
• Partner’s basis in the partnership interest is increased by partner’s
share of COD Income.
• Applicability of any exclusion of COD income is determined at the
partner level
• The test for insolvency takes place at the partner level
• Attribute reduction is applied at the individual partner level
• Cancellation of debt income may be excluded only by those partners
who are themselves bankrupt or insolvent

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DEFER PAYROLL TAXES ON
PPP LOANS
NICHOL CHIARELLA, CPA, MST
PARTNER
NEW YORK CITY OFFICE

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BUSINESSES RECEIVING PPP LOANS MAY ALSO
DEFER EMPLOYMENT TAX PAYMENTS
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• The CARES Act allows employers to defer the deposit and payment of the employer’s share
of social security taxes, and self-employed individuals to defer payment of 50 percent of self-
employment taxes.
• ALL employers may defer the deposit and payments of the employer’s share of social security
tax.
• Employers may begin deferring deposit and payment of the employer’s share of social
security tax required to be paid during the period beginning on March 27, 2020, and ending
December 31, 2020 (the “payroll tax deferral period”).
• Employers who have applied for and received a PPP loan that is not yet forgiven may defer
deposit and payment of their share of social security tax without penalties until the time that
the employer receives a decision from its lender that its PPP loan is forgiven.
• The amount of the payroll taxes previously deferred through the date that the loan is forgiven
continues to be deferred until December 31, 2021 and December 31, 2022 (the “applicable
dates” as provided in the CARES Act).

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SBA LOANS/NEXT WAVE
STATE AND LOCAL TAX IMPLICATIONS
WILFREDO FERNANDEZ, CPA
PARTNER
LIVINGSTON OFFICE
MITZI S. HOLLENBECK, CPA,
CFE
PARTNER
PROVIDENCE OFFICE
JAIME REICHARDT, JD, LLM
DIRECTOR
PHILADELPHIA OFFICE

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MAIN STREET NEW LOAN FACILITY
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Eligible Borrowers
• Business with up to 10,000 employees or
• Up to $2.5 Billion in revenue
• Created and organized in the USA, with significant operations in and majority of
employees based in the USA
• Borrowers can also participate in the Paycheck Protection Loan (PPP) and Economic
Injury Disaster Loan (EIDL), programs.

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MAIN STREET NEW LOAN FACILITY, CONTINUED
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Eligible Loan Features
• 4 year maturity
• Unsecured loan
• Deferral of amortization of principal and interest for one year
• Adjustable Rate of Secured Overnight Financing Rate (SOFR) plus 250 to 400 basis points
• Min loan $1 million
• Max loan lesser of $25 million OR an amount when added to existing outstanding debt and committed but
undrawn debt does not exceed 4 times 2019 EBITDA (EBITDA Leverage)
• No prepayment penalty
• Cannot refinance or prepay existing debt. Cannot cancel or reduce existing lines of credit
• Borrower must attest that it requires financing due to exigent circumstances presented by the COVID19
pandemic
• Borrower will make reasonable efforts to maintain its payroll and retain employees during the term of the
loan

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SALT OPPORTUNITIES
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• In addition to tax filing and payment relief via extended deadlines, states and
localities are also providing financing opportunities in the way of low (or no)
interest loans and grants.
• Monitor SALT developments and correspondence since these programs are
changing and attracting extraordinary demand.
• All CC office locations have offered programs, but most have halted new
applications for now, with some limited availability in CA & NJ.
• There will be new funding opportunities and legislative measures.
• SALT is tracking legislation which would provide additional relief:
• Example of NJ CARES tax credit and tax deferral program for small
businesses.

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POLLING QUESTION #4evolution
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Have you applied for a SBA loan?
a. Yes
b. No

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CLOSING REMARKS/ Q&A
JOSEPH BUBLÉ, CPA
PARTNER- FIRM TAX PRACTICE LEADER
NEW YORK CITY OFFICE

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THANK YOU
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Citrin Cooperman:
Allison Brack, CPA, Partner | 646.695.7878 | abrack@citrincooperman.com
Joe Bublé, CPA, Partner-Firm Tax Practice Leader | (212) 697-1000 | joeb@citrincooperman.com
Nichol Chiarella, CPA, Partner | (212) 697-1000 x6376 | nchiarella@citrincooperman.com
Paul Dailey, CPA, MBA Partner | (212) 697-1000 | paul.dailey@citrincooperman.com
Wilfredo Fernandez, CPA, Partner | (973) 218-0500 x2343 | wfernandez@citrincooperman.com
John Genz, CPA, MST, Partner | (347) 505-6308 | jgenz@citrincooperman.com
Ronald Hegt, CPA, Partner | (914) 949-2990 | rhegt@citrincooperman.com
Mitzi Hollenbeck, CPA, CFE, Partner | (401) 421-4800 | mhollenbeck@citrincooperman.com
Shawn Howard, CPA, MST, Partner | (301)834-2489 | showard@citrincooperman.com
Michael Kline, CPA, MST, Partner | (212) 697-1000 | mkline@citrincooperman.com
Jaime Reichardt, JD LLM, Director | (215) 545-4800 x4520 | jreichardt@citrincooperman.com
David Seiden, CPA, SALT Partner | (212) 225-9505 | dseiden@citrincooperman.com
Andy Tarquinio, CPA, Partner | (212) 697-1000 | atarquinio@citrincooperman.com