Spiegel Joins National Lending Experts

The National Lending Experts (NLE) recently announced Jeff Spiegel as the CPA/Business Advisor, and newest member, of its Advisory Board. Jeff accepted the invitation to contribute to the NLE network and offer leadership in the areas of tax, accounting, audit, and business consulting.

The NLE established itself to provide core leadership and guidance by offering up-to-date information and education on market conditions and trends via virtual platforms and national events. The organization is committed to connecting industry professionals with leadership and direction as it pertains to every aspect of the real estate industry, including residential and commercial lending, servicing, valuation, secondary markets, litigation, rehab/construction, and best practices.

Jeff looks forward to collaborating with his fellow Advisors by providing valuable resources to further industry success.

Learn more about The National Lending Experts.

COVID-19 Relief Under the Stafford Act

The President issued an emergency declaration in response to the coronavirus pandemic under the Stafford Act and subsequently approved major disaster declaration requests under Sec. 401(a) of the Stafford Act for all 50 states. Jurisdiction for the state of emergency, which took effect January 20, 2020, provides relief and assistance to businesses – including tax relief. Businesses experiencing financial loss directly due to COVID-19, during the disaster year, may elect to accelerate those losses to the 2019 fiscal year.


To accelerate a loss under these relief provisions:

  • Compensation for the loss cannot come from insurance or otherwise
  • It must be by a closed and completed transaction
  • The loss must be caused by an identifiable event
  • The losses sustained must relate to the disaster event and must be sustained during the taxable year of the event

Potential losses to accelerate on the preceding year tax return, if directly attributable to COVID-19:

  • Abandonment of business deals for costs otherwise capitalized
  • Abandonment of leasehold improvements
  • Costs related to the closure of store, branch, and facility locations
  • Inventory spoilage during the government shutdown
  • Losses from the sale or exchange of property
  • Mark-to-market securities
  • Permanent retirement of fixed assets
  • Prepaid events for travel, conference space, and hotel rooms when a refund or credit is not provided
  • Prepaid expenses to fulfill a contract when the contract is canceled
  • Payments to cancel contracts, leases, or licenses
  • Worthless securities (excluding bad debts)

The election to accelerate the loss is done on an original or amended 2019 tax return. This is a temporary tax adjustment, meaning any loss accelerated into the preceding tax year will no longer offset the current year activity.

For mortgage bankers, there may be losses on hedge positions or mortgage loans held for sale on closed deals that can be taken in 2019. All losses must be the direct result of the current coronavirus pandemic.

If the disaster loss creates a Net Operating Loss (NOL) in 2019, the taxpayer may have the added benefit of carrying back the NOL up to 5 years.

If you would like to discuss your filing options under the disaster relief provisions related to COVID-19, please contact your Spiegel tax manager.

Download the document.


Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.

Financial Statement Reporting for Proceeds from PPP Loans

History of the Paycheck Protection Program

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the US economy, including $349 billion that was earmarked for the Paycheck Protection Program (PPP) to be administered by the U.S. Small Business Administration (SBA). An additional $310 billion was later authorized for the PPP.

Under the PPP, eligible businesses can apply to an SBA-approved lender for a loan that does not require collateral or personal guarantees. The loans have a 1% fixed interest rate and are due in two years. However, these loans are eligible for forgiveness (in full or in part, including any accrued interest) under certain conditions. For loans (or parts of loans) that are forgiven, the lender will collect the forgiven amount from the U.S. government. A recent bill has extended the repayment term to five years for any portion of the loan not forgiven.

Businesses, including mortgage bankers, must meet certain eligibility requirements to receive PPP loans and are required to meet PPP guidelines to receive loan forgiveness. Therefore, it is vital to maintain detailed documentation of the initially submitted eligibility criteria, submitted by management, as well as detailed PPP loan expenditure documentation to support payroll expenses and other eligible expenses used for loan forgiveness.

Loan forgiveness applications are subject to audit by the U.S. government with a 6-year statute; however, businesses that borrow less than $2 million are expected to receive an automatic “good faith” certification, which may mean these businesses will not be subject to an audit. Future scrutiny of the good faith certification will depend on additional guidance issued by the SBA.

Businesses that received a loan over $2 million will be subject to greater scrutiny, audit, and may be deemed ineligible. The SBA may request repayment if it is determined required expenditure guidelines were not met and more importantly, the business entity did not actually qualify for a PPP loan.

Authorized Use of Loan Proceeds

A bill passed June 5, 2020 has extended the forgiveness period from 8 weeks to 24 weeks, lowered the percentage spent on payroll costs from 75% to 60% with the remainder allotted for rent, utilities, and interest payments. This new legislation contained the stipulation that if a minimum of 60% is not used for payroll costs, no amount of the loan can be forgiven. However, following the bill’s passage, the U.S. Treasury and SBA released a joint statement clarifying that borrowers who fail to meet the 60% threshold would qualify for partial loan forgiveness. You can choose which accounting rule to apply with respect to the PPP loan. Costs are defined below:

“Payroll Costs” – This is a key term for PPP loans and includes virtually all compensation paid to employees, as salaries, commissions, or similar compensation, including tips, vacation pay, family/parental leave and sick leave. Total compensation is capped at $100,000 per year for any person, and does not include payroll taxes imposed on the employer or withheld from the employee, plus:

  • Any state or local taxes assessed on the compensation of employees paid by the employer
  • Severance pay (allowance for dismissal or separation)
  • Costs related to the continuation of group health benefits and any retirement benefits (presumably including all COBRA benefits) Payments of interest on any pre-existing debt or mortgage obligation (but not  payment or prepayment of principal on such obligations)
  • Rent (including rent under an equipment or other lease), and
  • Utilities.

Eligibility for Loan Forgiveness

PPP loan recipients must certify, in good faith, that the loan was required to continue operations due to the current economic circumstances and acknowledge that the funds have been used to retain workers and maintain payroll or make business interest, rental or lease and utility payments, and that the applicant does not have other “covered loan” applications pending for similar or duplicative purposes.

 Alternative Accounting Treatment for PPP Loan Proceeds

Under the Financial Accounting Standards Board, Accounting Standards Codification (ASC) 470, Debt, a PPP loan is considered debt, regardless of whether the borrower expects the loan to be forgiven. Alternatively, the borrower may choose to consider the loan as a government grant and amortize the funds as they are used and there is a reasonable possibility of the loan being forgiven.

A Closer Look: Accounting for the PPP Loan as Debt

Under ASC 470, a business entity would record the full amount of the PPP loan as a liability and accrue interest over the term of the loan until the loan is forgiven. Considerations: This model would be more prudent for an entity that determines there is a reasonable possibility of not meeting the necessary criteria for loan forgiveness, or the business entity determines that maintaining the debt for financial statement reporting purposes does not impact debt eporting requirements or other financial metrics.

For income statement purposes, any PPP forgiveness would be considered gain on extinguishment of debt. For cash flow statement purposes, PPP loan proceeds would be considered a financing cash inflow; repayments would be considered a financing cash outflows; and forgiven amounts would be a noncash financing activity.

Accounting for the PPP Loan as a Government Grant

The current CARES Act/PPP framework provides clear guidance on the eligible uses of the PPP loan. Businesses that have high degree of confidence in their ability to qualify for loan forgiveness, and believe they have or will meet the authorized expenditure requirements are able to amortize the loan to income as expenses are accrued or paid. While there are no clear U.S. generally accepted accounting principles (U.S. GAAP), references related to this type of government loan provided to for-profit entities, an analogy could be made to ASC 958, Not-for-Profit Entities, Conditional Contribution or ASC 450, Contingencies, Gain Contingencies.  While not U.S. GAAP, International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure, provides a model to account for and forgive government loans. Under this model, the PPP loan would be accounted for as a grant, and a deferred liability established when funds are received. The deferred liability would be recognized in earnings in accordance with the requirements of the authorized PPP expenditures. Considerations: If this accounting treatment is elected, the business entity will have to continually assess whether it continues to meet the eligibility criteria. The SBA has also stated that it will provide further guidance and clarification regarding acceptable PPP expenditures.

For income statement purposes, the amortization of the grant would be reflected as other income, or a reduction of the expense to which it pertains.

For cash flow statement purposes, loan proceeds could be considered operating cash inflows because of nature of the expenses for which the loan is intended (e.g., payroll, rent). However, loan proceeds from financing activities may also be acceptable.


For either accounting treatment, the business should disclose the nature of the PPP, including the funds received, the amount deferred, the recognition of deferred amounts, and the requirements to recognize the deferred amounts as income.

Download the Spiegel document.


Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.

PPP Loan Forgiveness Application

Treasury, SBA Release Loan Forgiveness Application

The US Treasury and the Small Business Administration (SBA) have coordinated to release the Paycheck Protection Program (PPP) Loan Forgiveness Application. The PPP was enacted under the CARES Act to provide eligible small businesses with loans during the COVID-19 pandemic. The application and corresponding instructions advise borrowers on how to apply for forgiveness of PPP loans under the CARES Act.

The SBA is expected to issue regulations and guidance to assist borrowers as they complete their applications, according to the Treasury. Spiegel has been providing guidance to its clients as they work to navigate their way through the application process. It is important to provide the correct information, regarding the business loan, to ensure loan forgiveness.

Measures intended to reduce compliance burdens and simplify the process for borrowers include:

  • options to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles;
  • flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan;
  • step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness;
  • borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30; and
  • the addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.

Reach out to Spiegel directly if you would like assistance with the application (below).

SBA Paycheck Protection Program Loan Forgiveness Application; Treasury Press Release, May 15, 2020


Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.