The National Thoroughbred Racing Association has compiled a summary of the benefits available to horse owners under the latest federal COVID-19 legislation to help the industry overcome the challenges caused by the pandemic.
“Since every business and financial situation is unique, owners should consult their tax and financial advisors to ensure they have access to all the benefits to which they are entitled under the new law,” said Alex Waldrop , President and CEO of NTRA. “We thank Jen Shah, CPA, and director of tax services at the accounting firm Dean Dorton of Lexington, Ky., And Lauren Bazel, vice president and tax policy advisor for the NTRA in Washington, DC, lobbying firm The Alpine Group preparing this tax guide. “
The benefits available to horse owners include:
1. Tax benefits. Homeowners may be entitled to new tax benefits that allow them to file amended returns for previous years and get money back in the form of a tax refund.
a. Net operating losses can now be carried forward for up to five years. This applies to C corporations and individuals that generate net business losses. The IRS is currently accepting refund requests by fax in order to expedite these cash refunds.
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b. The limitation on excess business losses for individuals, trusts and estates is now deferred until 2021. Those who were subject to this limitation in 2018 and 2019 can file amended tax returns to receive cash refunds.
vs. The previous year’s AMT credits in C corporations, initially repayable until 2021, are now fully repayable in 2018 or 2019. The IRS is currently accepting refund requests by fax to expedite these cash refunds.
2. Emergency natural disaster loans are available to homeowners whether or not they have employees to help them finance working capital needs (eg, paying for training and paying bills. advice). In some cases, the borrower may be eligible for an advance of $ 10,000 on a forgivable loan. Initial loan disbursements (in addition to the $ 10,000 advance) are available on a two-month working capital basis, with a maximum of $ 15,000 per applicant. The first loan repayment to the SBA on EIDL is deferred for one year.
a. The EIDL program does not require a company to have employees who receive a W-2 salary, but the SBA currently distributes the EIDL advances of $ 10,000 which are not to be repaid only to companies with employees or self-employed workers. . They calculate them as $ 1,000 per employee up to a maximum of $ 10,000 per claimant.
b. Through the EIDL program, the SBA is also expected to quickly distribute two months of working capital of up to $ 15,000 per request. Thus, racing teams, coaches and others without employees still need to apply through the EIDL program, although these loans will need to be repaid. Loan applications for the EIDL loan program will be available on the SBA website once the SBA publishes it.
3. The Main Street Lending Program will strengthen support for small and medium-sized businesses that were financially healthy before the crisis by providing four-year loans to businesses employing up to 10,000 workers or with incomes of less than $ 2.5 billion. of dollars. Payment of principal and interest will be deferred for one year. The Federal Reserve and the Treasury recognize that companies vary widely in their financing needs and are still working on specific guidelines for this program, which are expected to be finalized by May 1.
4. The Paycheck Protection Program was funded by an additional $ 310 billion in the latest congressional act passed on April 24, 2020, of which $ 60 billion is for small banks and credit unions. These loan terms include two-year loans at an interest rate of 1%, deferral of payments for six months, accrued interest from the date of receipt of the loan, and no prepayment penalty. In addition, the PPP loan may be discounted if it is spent on qualifying expenses (salary, rent or mortgage interest and utilities). The exact calculation of the discount for the PPP loan is pending further guidance from the Treasury.
PPP loans are available to homeowners but only under specific circumstances:
a. Owners are generally required to have employees who receive a W-2 salary to take advantage of the PPP.
b. Owners partnering with both employees who receive W-2 salaries and self-employment income from partners should include both W-2 salaries and self-employment income from partners when calculating the PPP loan from the partners. partnership. Only the partnership needs to file the request.
vs. Independent sole proprietorships and sole proprietorship entities (e.g. LLCs) may be eligible for a PPP loan if they have a 2019 net income from Schedule C or Schedule F (2019 net income). If the 2019 net profit is less than zero, then this entity is not eligible for a PPP loan. PPP loan cancellation for sole proprietorships is limited to 8 / 52nd of 2019 net profit.
D. Employers who have received a PPP loan, but whose loan has not yet been canceled, can defer the filing and payment of the employer’s share of social security taxes from March 27, 2020 until the loan is canceled. canceled. These taxes will continue to be deferred under the normal payment terms of the PPP program. Once the employer’s PPP loan is canceled, this deferral is no longer available.
5. Employee retention payroll tax credit. The CARES Act created payroll tax credits for employers who retain W-2 employees if the business is totally or partially suspended due to COVID-19 orders from a government agency or if there is a 50% decrease in gross revenue compared to the previous schedule. trimester. This is essentially a refundable tax credit of up to 50% of the “eligible salary” paid by an employer to an employee from March 13 to December 31, 2020. The eligible salary includes salaries and health benefits provided by employer and cannot exceed $ 10,000 per employee. This credit for an employee who earns at least $ 10,000 annually is capped at $ 5,000. This credit is only available to employers who do not receive a PPP loan, and additional restrictions apply for those with more than 100 employees. An advance of this credit can be requested via IRS form 7200; otherwise, it can be claimed on the quarterly tax return.