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Rex is a Principal of HBK CPAs & Consultants and directs the firm’s Dealership Solutions Group . He has worked extensively in the dealership industry since 1984 as a department manager, a general manager and an owner, as well as providing tax, accounting and operational consulting services exclusively to dealers as an independent CPA. This experience includes working closely with hundreds of dealers from coast-to-coast since 1987 on creative tax planning and financial statements issues. He provides clients with a wide range of transaction work services and consults for them in specialty areas such as operations, government regulatory compliance, valuations and M&A feasibility studies. Rex is active in many professional associations. He is the current Chairman of the BDO Dealership Industry Group, contributes articles and commentary to dealership industry publications, is frequently called upon to speak to industry associations and conferences, provides expert testimony, and is regularly quoted by industry and the general media.
Rex Collins, CPA, CVAPrincipal
Dealership Solutions [email protected]
317-504-7900
Jordan Baierl is a Manager with the HBK Dealership Solutions
Group, who specializes in tax, advisory and other consulting
services for dealer clients across the country. Jordan works out of
the firm’s Pittsburgh, PA office. A graduate of Virginia Polytechnic
Institute and State University (commonly known as Virginia Tech)
where he received both a BS and Master’s in Accounting.
Jordan has worked on a wide variety of client solutions with HBK,
including but not limited to tax planning and preparation, financial
statement preparation and review, store performance and control
reviews, expense and margin benchmarking, buy/sell support and
assistance with manufacturer dealer candidate applications. Jordan
is passionate about the dealership industry and loves working
together with people to solve complex problems.
Jordan successfully completed the National Automobile Dealers
Association (NADA) Dealer Academy Training Program, a year-long,
intensive program focusing on each dealership department, as well
as leadership and financial success.
Jordan Baierl, CPAManager
Dealership Solutions [email protected]
724-934-5300
Amy Reynallt (330) 758-8613 [email protected]
Amy M. Reynallt, MBA, COVID-19 Business Management Advocate & SBA Loan Specialist
Amy is a manager of HBK'sManufacturing Industry Group located in the Youngstown, Ohio office. She joined the firm in 2019, after spending thirteen years in the manufacturing industry. Amy has experience navigating strategic and financial matters associated with manufacturing companies. She works closely with these companies to help them plan, execute, and meet their short- and long-term goals.
Amy Reynallt, MBAManager, Manufacturing Solutions
The Coronavirus Crisis
Webinar Series
Join HBK Dealership Solutions Group
Next week for another installment of our Third Thursday
May 28th 11:00 – 12:00 EDT
Registration link will be provided after this webinar.Topic subject to change.
Coronavirus Crisis Webinar Series
May 21
Paycheck Protection Program (PPP)
Loan Forgiveness for Dealerships
Hill, Barth & King, LLC (“HBK”) is a multidisciplinary financial services firm, offering the collective intelligence of hundreds of
professionals committed to delivering exceptional client service across a wide range of tax, accounting, audit, business advisory,
valuation, financial planning, wealth management and support services.
Copyright © 2020 Hill, Barth & King, LLC. All rights reserved.
This Presentation contains general information only, and HBK is not providing through this presentation accounting, tax, business,
financial, investment, legal or other professional services or advice. This presentation is not a substitute for professional services or
advice, and it must not be used as a basis for any decision or action that may affect you or your business. Please consult a qualified
business advisor before making any decision or taking any action that may affect your business. HBK shall not be responsible for
any loss sustained by any person who relies on this presentation.
Nothing is certain but change…Presentation Based on Guidance Released 5/15/2020Things are changing on a frequent basis please contact us with any questions or concerns.
• Taxability of the Remaining Loan
• PPP Forgiveness Application
• PPP Forgiveness – Additional Schedules and Forms
• Certifications and Optional Information
Paycheck Protection Program (PPP)
Overview
• Part of the CARES Act signed into law March 27, 2020.
• Additional funding added through the Paycheck Protection
Program and Healthcare Enhancement Act on April 24, 2020.
• Allows qualified businesses to apply for a loan with an approved
institution, with the potential for a portion, up to 100%, of that
loan to be forgiven.
• Visit https://home.treasury.gov/policy-issues/cares/assistance-
for-small-businesses or https://www.sba.gov/funding-
programs/loans/coronavirus-relief-options/paycheck-protection-
program for information and application.
PPP Loan Taxability
News from the IRS
• On 4/30, the IRS Issued Notice 2020-32 clarifying that no deduction is allowed for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the CARES Act.
• Sen. Chuck Grassley, the chairman of the Finance Committee, said he was disappointed in the IRS decision. “The intent was to maximize small businesses’ ability to maintain liquidity, retain their employees and recover from this health crisis as quickly as possible…this notice is contrary to that intent.”
• Section 1106(i) of the CARES Act addresses certain Federal income tax consequences resulting from covered loan forgiveness. Specifically, that subsection provides that any amount that (but for that subsection) would be includible in gross income of the recipient by reason of forgiveness described in section 1106(b) “shall be excluded from gross income.”
• Neither section 1106(i) of the CARES Act nor any other provision of the CARES Act addresses whether deductions otherwise allowable under the Code for payments of eligible section 1106 expenses by a recipient of a covered loan are allowed if the covered loan is subsequently forgiven under section 1106(b) of the CARES Act as a result of the payment of those expenses.
• Congress could override the IRS ruling by passing law that specifically allows the deductions. But for now, the expenses are not deductible.
PPP Forgiveness Application
Overview
• We will go through each portion of the Loan Forgiveness Application
and related documents.
• To apply for forgiveness, complete these forms as directed in the
instructions and submit it to your Lender. You may also complete
electronically through your Lender.
• There are four components:
1. PPP Loan Forgiveness Calculation Form
2. PPP Schedule A
3. PPP Schedule A Worksheet
4. Borrower Demographic Information Form (optional)
• Additional guidance from the SBA is coming!
• Changes may be coming, too.
o WSJ reporting that PPP expected to include more time and flexibility to spend funds.
PPP Loan Forgiveness Application
Documentation
PPP Loan Forgiveness Application
Documentation (continued)
PPP Loan Forgiveness Application
Documentation (continued)
PPP Loan Forgiveness Calculation Form
What is the Paycheck Protection Program?
PPP Loan Forgiveness Calculation Form
Covered Period
• Covered Period: Enter the 8-week (56-day) Covered Period of your PPP loan. The
1st day must be the same as the PPP Loan Disbursement Date.
o Example: if the Borrower received its PPP loan proceeds on Monday, April 20, the first
day of the Covered Period is April 20 and the last day of the Covered Period is Sunday,
June 14.
• Alternative Payroll Covered Period: For administrative convenience, Borrowers with
a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll
costs using the 8-week (56-day) period that begins on the 1st day of their 1st pay
period following their PPP Loan Disbursement Date.
o Example: if the Borrower received its PPP loan proceeds on Monday, April 20, and the
1st day of its 1st pay period following its PPP loan disbursement is Sunday, April 26,
the first day of the Alternative Payroll Covered Period is April 26 and the last day of the
Alternative Payroll Covered Period is Saturday, June 20. Borrowers who elect to use
the Alternative Payroll Covered Period must apply the Alternative Payroll Covered
Period wherever there is a reference in this application to “the Covered Period or the
Alternative Payroll Covered Period.” However, Borrowers must apply the Covered
Period (not the Alternative Payroll Covered Period) wherever there is a reference in
this application to “the Covered Period” only.
PPP Loan Forgiveness Calculation Form
What is the Paycheck Protection Program?
PPP Loan Forgiveness Calculation Form
Eligible Payroll Costs - Overview
• Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the 8 week (56-day) Covered Period (or Alternative Payroll Covered Period).
• Payroll costs are considered paid on the day that paychecks are distributed, or the Borrower originates an ACH credit transaction.
• Payroll costs are considered incurred on the day that the employee’s pay is earned.
• Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date.
• Otherwise, payroll costs must be paid during the Covered Period (or Alternative Payroll Covered Period).
• For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period.
• Count payroll costs that were both paid and incurred only once.
• For information on what qualifies as payroll costs, see Interim Final Rule on Paycheck Protection Program posted on April 2, 2020 (85 FR 20811).
• Schedule A, Line 10 helps calculate eligible Payroll Costs.
PPP Loan Forgiveness Schedule A
What is the Paycheck Protection Program?
Cash Compensation: sum of gross salary, gross wages, gross tips, gross commissions,
paid leave (vacation, family, medical or sick leave, not including leave covered by the
FFCRA), and allowances for dismissal or separation paid or incurred during the Covered
Period or the Alternative Payroll Covered Period. For each individual employee, the total
amount of cash compensation eligible for forgiveness may not exceed an annual salary of
$100,000, as prorated for the Covered Period; therefore, do not enter more than $15,385
in Table 1 or Table 2 for any individual employee.
PPP Loan Forgiveness Schedule A
PPP Loan Forgiveness Schedule A
PPP Loan Forgiveness Calculation Form
Eligible Non-Payroll Costs - Overview
• Nonpayroll costs eligible for forgiveness consist of:
o covered mortgage obligations: payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020 (“business mortgage interest payments”);
o covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 (“business rent or lease payments”); and
o covered utility payments: business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020 (“business utility payments”).
• An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. Eligible nonpayroll costs cannot exceed 25% of the total forgiveness amount. Count nonpayroll costs that were both paid and incurred only once.
PPP Loan Forgiveness Calculation Form
What is the Paycheck Protection Program?
PPP Loan Forgiveness Calculation Form
Salary/Wage Reduction
• This calculation will be used to determine whether the Borrower’s loan forgiveness amount must be reduced due to a statutory requirement concerning reductions in employee salary and wages.
• Loan forgiveness the Borrower will receive may be less, depending on whether the salary or hourly wages of certain employees during the Covered Period or the Alternative Payroll Covered Period was less than during the period from January 1, 2020 to March 31, 2020.
• If the Borrower restored salary/hourly wage levels, the Borrower may be eligible for elimination of the Salary/Hourly Wage Reduction amount.
• Borrowers must complete this worksheet to determine whether to reduce the amount of loan forgiveness for which they are eligible.
• Complete the Salary/Hour Wage Reduction column only for employees whose salaries or hourly wages were reduced by more than 25% during the Covered Period or the Alternative Payroll Covered Period as compared to the period of January 1, 2020 through March 31, 2020.
PPP Loan Forgiveness Schedule A
Salary/Wage Reduction
• For each employee listed in Table 1, complete a series of questions (using salary for salaried employees and hourly wage for hourly employees):
PPP Loan Forgiveness Schedule A
Salary/Wage Reduction
PPP Loan Forgiveness Schedule A
PPP Loan Forgiveness Schedule A
FTE Reduction
• For each employee, enter: the average number of hours paid per week /40.
• Round the total to the nearest tenth.
• The maximum for each employee is capped at 1.0.
• A simplified method that assigns a 1.0 for employees who work 40 hours or more per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.
• This calculation will be used to determine whether the Borrower’s loan forgiveness amount must be reduced due to a statutory requirement concerning reductions in full-time equivalent employees.
• Borrowers are eligible for loan forgiveness for certain expenditures during the Covered Period or the Alternative Payroll Covered Period. However, the actual loan forgiveness amount that the Borrower will receive may be less, depending on whether the Borrower’s average weekly number of FTE employees during the Covered Period or the Alternative Payroll Covered Period was less than during the Borrower’s chosen reference period (see Instructions to PPP Schedule A, Line 11):
o February 15, 2019 – June 30, 2019 OR
o January 1, 2020 – February 29, 2020
o Seasonal Employers: Either option above OR a consecutive 12-week period between May 1, 2019 and September 15, 2019
PPP Loan Forgiveness Schedule A
FTE Reduction – Safe Harbor
• The Borrower is exempt from such a reduction if the FTE Reduction Safe Harbor applies. See the FTE Reduction Safe Harbor instructions, below.
PPP Loan Forgiveness Schedule A
• Indicate the FTE of:
o any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and
o any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for cause, (b) voluntarily resigned or (c) voluntarily requested and received a reduction of their hours
o Indicate only if the position was not filled by a new employee.
PPP Loan Forgiveness Schedule A
FTE Reduction – Exception
PPP Loan Forgiveness Calculation Form
What is the Paycheck Protection Program?
PPP Loan Forgiveness Application
Certifications
PPP Loan Forgiveness Application
Certifications (continued)
PPP Loan Forgiveness Demographic Form
What is the Paycheck Protection Program?
The Coronavirus Crisis
Webinar Series
Join HBK Dealership Solutions Group
Next week for another installment of our Third Thursday
May 28th 11:00 – 12:00 EDT
Registration link will be provided after this webinar.
Let us answer YOUR dealer specific questions
Rex A. Collins, CPA, CVA317-504-7900
Jordan Baierl, CPA724-934-5300
HBK Dealership Solutions Group 317-886-1624
Hill, Barth & King, LLC (“HBK”) is a multidisciplinary financial services firm, offering the collective intelligence of hundreds of
professionals committed to delivering exceptional client service across a wide range of tax, accounting, audit, business advisory,
valuation, financial planning, wealth management and support services.
Copyright © 2020 Hill, Barth & King, LLC. All rights reserved.
This Presentation contains general information only, and HBK is not providing through this presentation accounting, tax, business,
financial, investment, legal or other professional services or advice. This presentation is not a substitute for professional services or
advice, and it must not be used as a basis for any decision or action that may affect you or your business. Please consult a qualified
business advisor before making any decision or taking any action that may affect your business. HBK shall not be responsible for
any loss sustained by any person who relies on this presentation.
Thank You and Stay Well!
