One of the challenges many not-for-profit organizations face is determining whether or not revenue falls under the category of a contribution or exchange transaction. In some cases, it’s a pretty straight forward determination, but the waters can occasionally become a bit murky. In June 2018, the Financial Accounting Standards Board (the FASB) issued the Accounting Standards Update (ASU) 2018-08, Clarifying the Scope and the Accounting Guidance ... more
SBA Revises Forms for PPP Loan Forgiveness, Including New EZ Form
The Small Business Administration (SBA) has issued a revised Form 3508, Paycheck Protection Program (PPP) Loan Forgiveness Application. The SBA also released a streamlined PPP Loan Forgiveness Application, Form 3508EZ. The newly issued application forms were needed to address the changes brought upon by the PPP Flexibility Act (PPPFA) of 2020. Form 3508EZ This new three-page form reduces the documentation and calculations required to apply ... more
Webinar Round-Up: PPPFA Forgivable Loan Accounting
Partners S. Scott Seamands and Stanley Woo hosted our quarterly virtual affordable housing roundtable, along with our client Mutual Housing of California. We have hosted these quarterly roundtables since the early 1990’s but in the current environment the roundtables have become virtual meetings. This quarter we outlined the issues related to obtaining loan forgiveness and other aspects of the SBA Paycheck Protection Program (PPP). We also ... more
Paycheck Protection Program Flexibility Act of 2020
The Paycheck Protection Program Flexibility Act (PPPFA) was signed into law on June 5, 2020, to modify certain provisions related to the forgiveness of loans under the Paycheck Protection Program (PPP). One change allows recipients of loan forgiveness under PPP to also defer a portion of 2020 payroll taxes, but there are several other modifications. The following chart summarizes the key provisions compared to the original CARES Act ... more
PPP Loan Forgiveness Application and Instructions Now Available
The Small Business Administration (SBA) has finally released the much-anticipated guidance on how borrowers can request forgiveness of their Paycheck Protection Program (PPP) loans. Borrowers will file SBA Form 3508, Paycheck Protection Program Loan Forgiveness Application. Form 3508 is an 11-page application with instructions that provide guidance on calculating the amount of loan forgiveness. The application form consists of four components: ... more
CDFI Fund Seeks Comment on Proposed Certification Standards
The Community Development Financial Institutions Fund (CDFI Fund) is seeking public comment through August 5, 2020, on proposed changes to the CDFI Certification Application and two additional Certification reports that are intended to improve the process for certifying, evaluating and recertifying CDFIs. CDFIs are certified by the U.S. Department of the Treasury to deliver capital and credit to families, businesses and communities ... more
SBA Provides New Safe Harbor for PPP Loans, Extended Repayment Date
Ever since the Coronavirus Aid, Relief and Economic Security (CARES) Act introduced the Paycheck Protection Program (PPP) in late March 2020, the U.S. Small Business Administration (SBA) continues to release piecemeal guidance to the public. One major concern for the borrowers is whether they had met the requirement that the loan was necessary, as borrowers not meeting the necessity requirement could be subject to fines and criminal ... more
Affordable Housing FAQ Resource for Multifamily Landlords and Managers
The coronavirus pandemic has created a disruption to the housing market. Many multifamily and affordable housing landlords and managers are seeing missed rent payments as tenants are losing income. Even if tenants are paying there is an uncertainty around whether or not they will be able to continue. In many markets, evictions are not lawful at this time, even for nonpayment of rent. As a result, there are efforts to provide assistance ... more
CARES Act Key Tax Provisions for Individuals and Businesses
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. The CARES Act is a $2 trillion relief package aimed at providing relief to the American economy in combating the effects of the coronavirus pandemic. While the CARES Act is not a tax relief measure, it does include provisions that center on tax relief to individuals and business owners. Following are some of the more noteworthy tax provisions ... more
Changes to Sec. 163(j) that Impacts LIHTC Partnerships under CARES Act
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) amended Section 163(j) to allow many taxpayers to deduct more business interest expense for taxable years beginning in 2019 and 2020 by increasing the limitation from 30% of Adjusted Taxable Income (ATI) to 50% of ATI. For partnerships, the increase to 50% of ATI applies to years beginning in 2020 only, and not to years beginning in 2019. The LIHTC partnership may elect to not ... more
Changes to Filing of Amended Partnership Returns Under Revenue Procedure 2020-23
On April 8, 2020, the IRS issued Revenue Procedure 2020-23 (Rev. Proc. 2020-23), which allows an eligible partnership to file an amended partnership return for taxable years beginning in 2018 and 2019 using Form 1065, U.S. Return of Partnership Income (Form 1065), with the “Amended Return” box checked, and issue an amended Partner’s Share of Income, Deductions, Credits, etc. (Schedule K-1), to each of its partners. Eligible partnerships are only ... more
Expanded Relief for Tax Filing and Payment Due Dates
The IRS has issued a series of notices (Notice 2020-17, Notice 2020-18 (superseded Notice 2020-17), Notice 2020-20, and Notice 2020-23) in an effort to provide administrative relief to those taxpayers affected by COVID-19. Collectively, these notices extend the filing and payment deadlines to July 15, 2020 for various returns and payments. The latest IRS Notice 2020-23 amplifies the earlier notices and greatly expands the July 15, 2020 ... more
Paycheck Protection Program Part II
The Senate passed a bill of nearly $480 billion on Tuesday afternoon to extend funding for the Paycheck Protection Program (PPP), provide additional funding for hospitals, and expand funding for COVID-19 testing. Some $310 billion is earmarked for the PPP, which last week had exhausted all of the program’s initial $349 billion funding in less than two weeks due to overwhelming demand. The bill now goes to the House, which is expected to vote on ... more
Accounting for Forgivable Loans and Other Revenue
With recent passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, 501(c)3 non-profit organizations and 501(c)19 veterans organizations with 500 or fewer employees (or that meet SBA size industry standards) can apply for emergency relief. Part of that relief comes in the form of potentially forgivable loans through the U.S. Small Business Administration. In our last blog post on revenue recognition, we talked about how to ... more
Pitfalls of Revenue Recognition for Nonprofits
One of the challenges many not-for-profit organizations face is determining whether or not revenue falls under the category of a contribution or exchange transaction. In some cases, it’s a pretty straightforward determination, but the waters can occasionally become a bit murky. In June 2018, the Financial Accounting Standards Board (FASB) issued the Accounting Standards Update (ASU) 2018-08, Clarifying the Scope and the Accounting Guidance for ... more
LvHJ’s COVID-19 Update
We hope you and your loved ones are well! It has been an unprecedented week for California. We are all learning how to adjust to our new circumstances; both professionally and personally. In the wake of Governor Newsom's Stay-at-Home order for California, we have had no choice but to further restrict our activities to stay in compliance. Our doors at both 301 Howard St and 111 Pine St will remain closed for an indefinite period and will only ... more
OMB Provides Single Audit Extension Due to COVID-19
The US Office of Management and Budget (OMB) released memorandum M-20-17 on March 19, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations. This memorandum is addressed to federal awarding agencies and instructs that the federal awarding agencies are authorized to take certain actions, as they deem appropriate and to the extent ... more
Manage Your Partnership Interests: Technical Termination Rules for California
On July 1, 2019, California’s Governor, Gavin Newsom, signed Assembly Bill 91 (A.B. 91) into law. This bill conforms selective tax laws in California to the changes made under the Tax Cuts and Jobs Act of 2017 (TCJA). These changes impacted technical terminations for partnerships as follows: Repeals the partnership technical termination provision to conform to federal income tax law, as amended by the TCJA, applicable for tax years beginning ... more
Don’t Risk Having Procurement Costs Disallowed
Federal grantee procurement standards, as stipulated in the “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” impose strict requirements on not-for-profits receiving federal funds. These standards have significantly altered nonprofit purchasing policy and documentation. After a lengthy grace period to allow more time for implementation, the requirements became effective in calendar year 2018 or ... more
Affordable Housing Outlook Cites Concern Over IRS Bond Caps
At a recent boot camp for affordable housing accountants, we heard several leaders voice concerns and some optimism for the coming year of affordable housing development finance and legislation. In California and its biggest cities, there are several new laws put forth to support new construction and rehabilitation of affordable housing, but concerns over lack of available land is dampening some optimism. Of biggest concern to CFOs, however, ... more
12 Days of Business Planning Before December 31
Before we know it, the new year will arrive. Rather than make resolutions, use the last few days of the year to take action on tax opportunities and business planning — bringing real benefits and results for your business. Just to make it fun, we have come up with 12 days of year-end planning for your business. These tips may remind you to take action on business items you have ignored or delayed. Add these to your list, or contact LvHJ for ... more
Make your Nonprofit Stand out on National Day of Giving
National Day of Giving is a great opportunity for nonprofits and philanthropic organizations to procure donations before the end of the year. However, it has become a popular day on the calendar and many organizations like yours are looking to benefit from this day created just for them. For 2019, National Day of Giving, also known as Giving Tuesday, falls on December 3rd. Start your planning with these tips to make your nonprofit stand out from ... more
Maintaining Not-for-Profit Compliance and Tax-Exempt Status
Not-for-profit organizations need to be continuously aware of what is required to maintain their tax exemption. Engaging in activities that affect this status can result in penalties called intermediate sanctions or the revocation of the organizations tax-exempt status. Here are a few areas that could put your not-for-profit’s tax-exemption status at risk: Earning Unrelated Business Income (UBI). Earning too much income that is not ... more
Tax Reform Impact for Closely-held Businesses
When the 2017 Tax Cuts and Jobs Act (TCJA) went into effect, there were a lot of benefits for businesses and individuals in the area of corporate and personal taxes. Many new deductions were created for S-Corps and owners of pass-through entities. Along with the benefits, there is still a layer of complexity to the new tax laws that many privately held organizations are still working to understand and navigate. To complicate matters, this tax ... more
Nontraditional Funding Methods for Not-for-Profit Organizations
Funding a not-for-profit is a big endeavor. Most organizations are familiar with the usual funding sources consisting of grants, donors, membership fees, crowdfunding sites, foundations, sponsorships and planned giving programs. What happens when you’re doing everything you can but you still need to generate additional revenue? This is when it’s time to look at some new and different funding sources that cut expenses and/or generate ... more
Government Grants: Exchange or Contribution? It Depends.
When nonprofit organizations report certain government grants, revenue recognition standards can still be tricky. Although FASB has provided clarification, new accounting standards regarding revenue recognition from contracts (FASB ASC 605) have created more questions about how to categorize grants. Are they an exchange or a contribution? But first, let’s define the difference between an exchange and a contribution. Exchange transactions ... more
Charitable Giving Planning Through Automated Giving Programs
Automated giving programs are on the rise as a convenient way to boost monthly charitable nonprofit revenues. Sometimes called recurring givers, donors who choose this method can give the same amount at regular intervals, usually through credit card transfers or automated account deductions. Here are some strategies to create or increase monthly automated giving programs. But first, consider the additional work required: Educate your team and ... more
GAAP Alternatives Extended to Not-for-Profit Financial Reporting
In an effort to make accounting less complicated and less costly for not-for-profit financial reporting, FASB recently announced a new standard that will extend two GAAP alternatives that were originally developed for private companies. The standard will make not-for-profits eligible for the private company alternatives on accounting for goodwill and accounting for identifiable intangible assets in a business combination. An announcement in ... more
NPOs Must Review Procurement Policies Regarding Federal Awards
Not-for-profit organizations (NPOs) that receive federal money in the form of loans or grants will probably need to update their written procurement policies to conform to the new federal requirements. Previously only applicable to state and local governments, NPOs that receive federal awards are now included in this requirement under the new Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (aka ... more
‘Creative’ Estate Planning Requires Caution with Section 199A Reform
Entrepreneurs and closely held family businesses that have established multiple trusts, or plan to create trusts based on tax reform, should pay attention to certain opportunities and dangers for new tax compliance, especially regarding Section 199A. You have probably heard that a new 20 percent federal income tax deduction is available for Qualified Business Income, applicable to a married couple with taxable income of no more than $315,000 and ... more