As businesses have discovered, the CARES Act is an agglomeration of tax law and Small Business Administration rules. The concepts do not always mesh easily. Earlier today, Ruchelman P.L.L.C. published a series of Q&A’s intended to assist decision makers in determining concepts of eligibility, loan amount forgiveness under the P.P.P. but not the E.I.D.L., automatic E.I.D.L. grants, and temporary changes to the tax law, all designed to provide liquidity for businesses and employment opportunity for their employees.

Paycheck Protection Program (“P.P.P.”)

• Which businesses are eligible under the P.P.P.?
• In determining whether a business concern qualifies for a P.P.P., is it looked at by itself or with affiliates?
• Are foreign-owned business concerns eligible under the P.P.P.?
• On what date must a business actually be operating?
• In what circumstances can a business concern that meets the eligibility test be disqualified from applying for a P.P.P. loan?
• How is the eligible loan amount determined?
• How must the loan be used in order to be eligible for forgiveness, discussed below?
• What is the interest rate for a P.P.P. loan and the maturity date and is there a prepayment penalty?
• How does the forgiveness of the loan feature work?
• Is forgiveness automatic?

Economic Injury Disaster Loan (“E.I.D.L.”)

• What is the purpose of the E.I.D.L. Program?
• What special modifications have been made to the E.I.D.L. program to address the COVID-19 pandemic?

Business Tax Provisions

• What is the employee retention credit and how does it work?
• Have payment of employer payroll taxes been deferred?
• May net operating losses now be carried back?
• How are pass-through losses from partnerships and L.L.C. affected by the CARES Act?
• How are refundable alternative minimum tax (“A.M.T.”) credits affected by the Cares Act?
• How is the limitation on deductible business interest of a corporation under Code §163(j) affected by the CARES Act?
• How does the CARES Act correct a technical error regarding “qualified improvement property”?
• What is the U.S. Federal income tax treatment of forgiveness of any portion of a P.P.P. loan?

The answers to these questions can be found here.

Although working offsite, members of Ruchelman P.L.L.C. are available to assist in applying for relief programs. We can be reached at the office telephone number +1 212 755 3333.