Covering Your Assets: New coronavirus stimulus package? Not anytime soon (Voices)
Covering Your Assets
The U.S. Senate and House of Representatives are back in session and every coronavirus relief idea is on the table.
Will any of them stick? While it may seem improbable given the current political divide, there is common ground.
Funding economic stimulus and vaccine development and distribution are part of each party’s proposed plan. Now they just need to agree on which programs to fund and the amount.
Many anticipate that the proposal that passes will include another round of $1,200 stimulus checks for those who qualify. Even with all the barriers — including a lame-duck Congress, pending Georgia elections, and the need to pass a government spending bill before December 11 to keep the government running — there is an opportunity.
Congress would like to avoid another government shutdown and may be ready to strike a deal in advance of the December 11 deadline.
The last spending bill signed by the president keeps the government open through then. Any stimulus package passed during this period is expected to be narrowly focused.
When will we know more?
While headlines regarding the presidential election aftermath are still capturing the nation’s attention, the real battle is being fought in Georgia — with two Senate seats headed for a runoff.
Right now, the Senate is scheduled to include 50 Republicans, 46 Democrats and 2 independents (Sens. Bernie Sanders and Angus King are independents who caucus with the Democrats). The winners of the Georgia runoff election will fill the final two seats.
Republicans have historically held both of the undecided Georgia Senate seats. If Democrats can win both seats, they will take control of the Senate (because the Constitution empowers the vice president to vote on any matter in which the members of the Senate are equally divided).
Thus, the outcome of the January 5, 2021, runoff could determine whether the country will have political gridlock or sweeping change.
The uncertainty regarding which party will control the Senate for the next two-year cycle adds to the uncertainty regarding the fate of the current stimulus proposals.
If no deal is made in advance of the December 11 government shutdown deadline, don’t count on seeing any agreement prior to the end of the current Congress in January 2021.
Other points to ponder
As many PPP borrowers are going through the logistics of loan forgiveness, they may want to consider including non-payroll costs in its forgiveness, subject to the 40% limitation, even though they might be able to get 100% using payroll only.
IRC section 199A allows up to a 20% deduction of Qualified Business Income, subject to a 50% of W-2 wage limitation.
Savvy taxpayers may want to work through the mechanics of this, because even allocation of non-deductible forgiveness to healthcare and retirement rather than 100% to wages may impact QBI, and the deduction.
CLA’s Walker Wilkerson assisted with the preparation of this article.
Michael Bosma, CPA, is Principal-in-Charge of the Reno office of CliftonLarsonAllen LLP. His NNBW column, “Covering Your Assets,” focuses on effective planning strategies for every business owner. Reach him for comment at firstname.lastname@example.org.
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