Test your hand to see how well you know the December COVID-19 stimulus package.
Tis’ the season for economic relief! It looks like Congress was in the giving spirit as they delivered a much needed COVID Stimulus package just in time for the New Year. It took a few months of negotiations but there are a lot of incredibly valuable provisions scattered throughout the Act’s 5,500 pages.
The new Act makes numerous tax changes, creates new business grants, and puts money directly in the hands of the American people, amongst other things.
As a holiday tradition for end of year legislation releases such as this, it’s time we play another round of PPP Trivia. Try your hand and see how well you know the latest stimulus package by answering the following questions:
1. Under the Act, second draw borrowers are permitted to take an amount equal to 2.5 times the average total monthly payroll costs incurred or paid during the 1-year period before the date on which the loan is made or calendar year 2019 (not to exceed $2,000,000). However, NAICS Code 72 entities such as restaurants, bars, caterers, hotels, snack bars, cafeterias, mobile food services, food service contractors, boarding houses, vacation camps, RV parks, bed-and-breakfasts, and casino hotels are eligible to receive _____ times the average total monthly payroll costs incurred or paid during the 1-year period before the date on which the loan is made or calendar year 2019 (not to exceed $2,000,000) provided they meet the necessity, employee threshold, and gross receipt reduction requirements also posited by the Act.
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2. For taxpayers who elect not to itemize deductions, the Act allows a $300 ($600 for taxpayers married filing jointly) above the line charitable deduction for cash payments to a public charity made in _______.
A. 2020 only
B. 2021 only
C. 2019 only
D. 2020 and 2021
3. The EIDL Program is now targeted specifically for the businesses most affected by the Coronavirus pandemic. Which of the following is the percentage rate that an EIDL loan bears interest?:
4. True or False: Borrowers are still required to certify on their PPP loan applications that the loan is “necessary to support the ongoing operation of the business”?
5. The requirements to qualify for a second draw PPP loan are different than what was required to qualify in the first round. What is the employee number threshold that a borrower must be at or below (except if the business has multiple physical locations) in order to qualify for a second draw PPP loan?:
6. Sticking with the same theme, a borrower must show a ____% reduction in gross receipts for any quarter in 2020 compared to the same quarter in the previous tax year in order to qualify for a second draw PPP loan:
7. The new Act expands the definition of “payroll costs” that a borrower must expend 60% of their PPP loan funds on in order to qualify for full forgiveness. Which of the following is an item NOT included in the new definition of payroll costs?:
A. Group life insurance payments
B. Group dental insurance
C. Group vision insurance
D. Group Chiropractic care
8. 501(c)(6) organizations are now eligible to receive PPP loans under this new Act – with a few exceptions. Which one of the following types of 501(c)(6) organizations is still not eligible to receive a PPP loan?:
A. Real estate boards
B. Chambers of commerce
C. Professional sports leagues
D. Business leagues
9. The Act creates a number of exceptions regarding who is eligible to receive a second draw PPP loan. Organizations owned 20% or more by people and entities from which of the following countries are prohibited from taking a PPP loan?:
D. North Korea
10. The Act appropriates $15 billion worth of grants to help save “shuttered venues.” These eligible live entertainment venues can receive a grant that is not required to be repaid in an amount equal to ____% of their 2019 gross earned revenue.
11. Under the CARES Act, a borrower was permitted to choose between an 8-week or a 24-week covered period which was the amount of time they had to spend their PPP loan proceeds on eligible expenses in order to earn forgiveness. This covered period has since changed under this new Act. Which of the following most accurately describes how the covered period now works?:
A. The borrower has exactly 16 weeks following receipt of the loan to spend the proceeds on eligible expenses.
B. The borrower may choose any period of time between 8 weeks and 24 weeks after receipt of the loan in which to spend the proceeds on eligible expenses.
C. A borrower must expend all loan proceeds on eligible expenses by Dec. 31st, 2021 in order to receive full forgiveness.
D. A borrower may take any amount of time within 2 years of the date of receipt of the loan to expend their PPP loan proceeds on eligible expenses in order to earn full forgiveness.
12. The Act creates 4 new categories of expenses eligible for forgiveness (so long as 60% of loan proceeds are spent on payroll costs). Which of the following is one of the new categories included in the other 40% of forgivable expenses?:
A. “Covered operations expenditures”
B. “Covered property damage costs”
C. “Covered supplier costs”
D. “Covered worker protection expenditures”
E. All of the above
13. True or False: The amount of PPP loan forgiveness a borrower is eligible to receive will be reduced by an amount equal to any grant a borrower also received through the EIDL Advance program?
14. Which of the following is the new deadline for borrowers to apply for a second draw PPP loan?:
A. January 31st, 2021
B. December 31st, 2021
C. March 31st, 2021
D. June 15th, 2021
15. Educators are now permitted to include the purchase of any personal protective equipment in their deduction for the purchase of school supplies for a maximum deduction amount of $______.
16. True or False: The Act allows for the write off of 100% of business meal expenses for 2021 and 2022 if they are permitted by Section 274(n) of the Internal Revenue Code and if the food and beverage is provided by a restaurant and paid or incurred prior to January 1, 2023.
17. The Act extends the federal unemployment insurance that has been supplementing state unemployment insurance for those who have lost their jobs. Originally, individuals would receive an additional $600 per week, but this amount later became $300. Until which of the following dates has the $300 federal unemployment insurance payments been extended to?:
A. March 31st, 2021
B. December 31st, 2021
C. May 1st, 2021
D. March 14th, 2021
18. The Act provides for additional $600 economic impact payments that will go directly into individuals’ hands. The payments begin to phase out at certain adjusted gross income thresholds, however. At what AGI threshold does an individual start to lose out on economic impact payments?:
19. One of the benefits to businesses that arose out of the Coronavirus pandemic was the fact that they were permitted to defer payment of their payroll taxes until April 30th, 2021. The Act extended that deferral period even longer. Which of the following dates are businesses now permitted to defer payment of payroll taxes to?:
A. January 31st, 2022
B. December 31st, 2021
C. April 30th, 2022
D. September 1st, 2021
20. The Act temporarily increases the Medicare physician fee schedule by ____% as another way to reimburse healthcare providers.
21. What is the maximum permitted amount that a borrower can take in a second draw PPP loan in addition to any amount they may have received from a round one PPP loan?:
22. In what was arguably the most important provision of the entire Act (at least from the viewpoint of a tax attorney), Congress finally memorialized its intent regarding the deductibility of expenses paid with PPP loans. True or False: Expenses paid using PPP loans will be deductible in the fashion they would normally be.
I hope you enjoyed testing your knowledge. Check your answers below and let us know how you did!
I anticipate there will be much discussion surrounding all of the very important provisions of the new Act and will work hard to make sure you stay up to date and informed on any changes, guidance, or interpretations.
Happy New Year!
Answers: 1.B 2.B 3.A 4.A 5.C 6.B 7.D 8.C 9.A 10.D 11.B 12.E 13.B 14.C 15.B 16.A 17.D 18.B 19.B 20.C 21.D 22.A