Important Year-End Updates from Siegfried Advisory


As 2020 comes to an end, we wanted to share a few important year-end updates.

Election Updates

Pending the outcome of legal challenges brought by the campaign and supporters of President Donald Trump, with an inauguration on January 20, 2020, Joe Biden presumably will become the 46th President of the United States.

The White House will likely be controlled by the Democratic Party, the House has remained Democratic, and control of the Senate is open depending on the outcome of runoff elections in Georgia, which are set to take place in early January. While the outcome is still uncertain, both Republican candidates were ahead in both elections, but did not meet the 50% hurdle required in Georgia required to avoid a runoff. The results of the runoff elections will dictate the Senate majority. It is widely believed that for any sweeping tax reform legislation to be passed, the Senate needs to have a Democratic majority.

While in normal tax planning strategies the goal is to shift expenses to take last-minute deductions before year-end, it may make sense to accelerate income into 2020 given Biden’s proposed tax policies and the open Senate race in Georgia.

If you are not already working with us and would like year-end tax planning, please reach out to your Siegfried Advisory Relationship Coordinator.

Paycheck Protection Program (“PPP”) Loan Forgiveness 

Over the past several weeks, many banks across the country have begun releasing their loan forgiveness applications. If you received a PPP Loan, this is a great time to get these applications filled out to ensure loan forgiveness.  It is extremely important to provide complete and accurate information as you apply for forgiveness.

We have a team ready and willing to assist with your PPP forgiveness needs. If you would like assistance, please reach out to your Siegfried Advisory Relationship Coordinator.

Best Regards,

The Siegfried Advisory Team


Tax planning is an exercise that many individuals visit with their tax advisors in the later months of each year to ensure that they are taking advantage of all of the potential tax opportunities that are available for their specific situation. This year, being an election year, throws a wrench in the typical considerations of tax planning as both candidates have very different ideas of what Federal tax law will look like in the upcoming years. President Donald Trump signed into law the Tax Cuts and Jobs Act (TCJA) in December of 2017 which implemented numerous changes into the tax law that took effect for tax years beginning 2018. Notable items within TCJA are currently set to expire in 2026 but if there is a change in the presidency then the existing tax law may be repealed and replaced with the tax policies of the Democratic candidate Joe Biden.

Below is a chart which summarizes the high-level differences between the tax policies of Trump and Biden:

INDIVIDUAL TAX Tiered tax brackets with a maximum rate of 37% 

Capital gains are taxed between 0% and 20% dependent upon your tax bracket.

Top tax rate will remain at 37% but adjustments to reduce 22% tax bracket down to 15%. 

Retain tiered capital gains rates.

Increase top tax rate to 39.6%. 

Impose and additional 12.4% payroll tax on wages over $400,000. 

Retain tiered capital gains rate but increase top rate to 39.6% on income above $1mm.

CORPORATE TAX 21% corporate tax rate Retain 21% tax rate Increase corporate tax rate to 28%.

Imposition of a minimum tax on corporations with book profits of over $100m.

BUSINESS TAX 100% bonus depreciation on qualified assets 

20% Qualified Business Income Deduction (QBID) for qualifying businesses. 

Qualified Opportunity Zone (QOZ) tax deferrals for real estate investments in economically-distressed areas.

Make 100% bonus depreciation and Qualified Business Income Deductions permanent. 

Expand the Qualified Opportunity Zone areas.

No specific proposal on depreciation but may be impacted by AMT changes. 

Retain QBID but phase out deduction for filers with income over $400k. 

Reform aspects of current QOZ program.

NEW TAX CREDITS   Implement a “Made in America” tax credit and creating a tax credit for bringing jobs back from China.

Some form of extension of current Child Tax Credits.

Domestic manufacturing tax credit.

Reestablishes the First-Time Homebuyers’ Tax Credit.

Expansion of New Markets, Child, and Renewable Energy Tax Credits.

If you believe that you would benefit from tax planning, in regards to the election or in general, feel free to reach out to a member of our team. This message is not intended to constitute legal or tax advice.

2016 Protective Refund Claim – ACA Taxes

Recent months have been punctuated by new legislation owing to continual shifts in the economic landscape. More changes could be on the horizon. The 2010 Patient Protection and Affordable Care Act (ACA) imposed a “shared responsibility payment” for individuals that did not maintain “minimal essential health coverage”. In 2017, the Tax Cuts and Jobs Act reduced that payment to zero. A court challenge soon followed, arguing that if the penalty is zero, the mandate itself is unconstitutional. While the Court agreed that a zero-penalty mandate was unconstitutional, the constitutionality of the Affordable Care Act as a whole was not definitively undermined. However, there are matters waiting to be argued before the Supreme Court that will likely prompt further review of the legality of the remaining features of the ACA. If the entire Affordable Care Act is at some point deemed unconstitutional, Taxpayers who paid the 3.8% tax on net investment income and/or the 0.9% Additional Medicare Tax could be entitled to refunds. Tax returns eligible for refund claims could include filings as early as 2016, and the statute of limitations for requesting refunds for the year 2016 expires on July 15, 2020.

There are no guarantees that current or future matters before the Supreme Court will result in a refund for 2016 or any subsequent years. However, it is our recommendation that protective refund claims be filed for taxpayers who paid Net Investment Income Tax or Additional Medicare Tax in 2016. These filings will help to preserve eligibility for a refund in the event the Court’s ruling allows for them. Please contact your Siegfried Advisory Relationship Coordinator soon as possible if you would like us to file a protective refund claim on your behalf for a nominal fee.

Should you have additional questions, feel free to reach out to a member of our team. This message is not intended to constitute legal or tax advice. The window of time to act is short and we want to help you get every benefit afforded to you by the law.

2020 Estimated Tax Payments

The 2020 Q1 and Q2 estimated payment deadline is quickly approaching on July 15th, 2020. Many of you have already received your 2019 tax returns and 2020 estimates, and the rest are forthcoming. Typically, we set most clients up under a prior year safe harbor where 110% of prior year tax is paid in throughout the year. You are allowed to pay estimates based on the lower of 110% of prior year Tax or 90% (or 100% at certain income limits) of current year tax. Considering the possible negative impact COVID 19 may have had to your business and individual Income, please let us know if you would prefer us to revisit your estimates based on current year data to reduce your quarterly estimates and ensure you are able to retain as much cash as possible as the economy recovers.

Please reach out to your Siegfried Advisory Relationship Coordinator if you would like to discuss your 2020 estimate plan or with any other questions. Additionally, if you are not currently a tax client but require tax assistance, please reach out to your Relationship Coordinator. Kindly note that this message does not constitute particularized financial or tax advice.

PPP Loan Guidance Update

On June 3, 2020, the United States Senate passed the House version of the Paycheck Protection Program Flexibility Act (“PPPFA”). The PPPFA amends the original Coronavirus Aid, Relief, and Economic Security (“CARES”) Act to loosen restrictions placed on PPP loans, making them potentially more favorable for borrowers. The significant changes to the PPP loan program are highlighted below:

Extended covered period for PPP loan forgiveness. The bill extends the eight-week covered period to the earlier of 24 weeks or December 31, 2020. Borrowers can choose to keep the original eight-week period as well. The flexibility is designed to make it easier for more borrowers to reach full loan forgiveness.

Reduction of the payroll expenditure requirement from 75% to 60%. However, the 60% now becomes a cliff, meaning that borrowers must spend at least 60% of the loan proceeds on payroll or none of the loan will be forgiven. Currently, a borrower is required to reduce the amount of eligible forgiveness if less than 75% of eligible funds are used for payroll costs, but forgiveness isn’t eliminated if the 75% threshold isn’t met. This new cliff is based on the wording of the PPPFA, but some congressional leaders are hoping this can be corrected through Small Business Administration (“SBA”) regulation.

Increased PPP loan maturity. Borrowers will have 5 years to pay back the remaining balances on PPP loans after forgiveness. Currently, the maturity period is 2 years. The interest rate of 1% remains unchanged.

Longer payment deferral period. Payments due on PPP loans will be deferred until the date that the loan forgiveness amount is remitted to the lender. This extends the current deferral period of a fixed 6 months from the date proceeds were received.

Extended safe harbor cutoff date. Borrowers will have longer to rehire full-time equivalent (“FTE”) employees and eliminate prior salary/wage reductions to pre-pandemic levels required for full forgiveness. The bill extends the cutoff date to December 31, 2020, from June 30, 2020.

New loan forgiveness exemptions. The bill creates two new exemptions allowing borrowers to achieve full loan forgiveness even if they don’t restore FTE counts to pre-pandemic levels. Borrowers can adjust their FTE reduction calculation if they (i) cannot find qualified employees to hire/rehire or (ii) are unable to restore business operations to February 15, 2020 levels due to COVID-19 related operating restrictions.

Ability to delay payment of employer payroll taxes. The new legislation allows a PPP borrower to utilize the payroll tax deferral provision under the CARES Act. PPP borrowers are currently disallowed to take advantage of this provision if they receive forgiveness on their loan.

The Senate approval of the PPPFA sends the House bill to President Donald Trump, who is expected to sign it into law. Formal guidance is expected to be posted by the SBA sometime after. We will continue to monitor changes to the program and provide updates accordingly. As always, please contact your Siegfried Advisory Relationship coordinator with any questions, as the above summary is just that—a summary—and not meant to function as financial or tax advice.

PPP Loan Additional Guidance for Clients

Dear Valued Clients & Business Partners,

We want to make you aware of some additional guidance around the Paycheck Protection Program (“PPP”) loan forgiveness that was released by the U.S. Small Business Administration (“SBA”) on May 15th. Below is an executive summary of the most important and relevant information for you to review. We want to remind you that during these times, we are here to serve all of you any way we can. If you are interested in setting up time to speak with a member of our team, we can arrange a time to discuss further how these changes impact you personally.

1. Forgivable Cost Categories:
• Payroll Costs *at least 75% of total forgiven amount must lie within this category*
• Business Mortgage Interest Payments
• Business Rent or Lease Payments
• Business Utility Payments

2. Payroll Cost Highlights:
• Deduction of covered expenses ‘paid’ or ‘incurred’ during the 8-week covered period
• Payroll costs are considered incurred on the day that pay is earned, and considered paid on paycheck distribution date
• Payroll Cost Categories:
– Cash Compensation – Cannot exceed annual salary of$100,000, as prorated for the covered period (or $15,385 for the 8-week period per individual)
– Non-Cash Compensation – Not subject to same limitations as cash compensation (includes employee covered health insurance, retirement contributions, etc.)
– Owner Compensation – Capped at the lower of (1) $15,385 or (2) the 8-week equivalent of the owner’s applicable compensation in 2019

3. Non-payroll Costs Highlights:
• Must be paid or incurred during the 8-week covered period
• Eligible costs include:
– Business Mortgage Interest – Must be incurred before 2/15/2020
– Business Rent or Lease Payments – Agreements must have been in place on or before 2/15/2020
– Business Utility Payments – Service must have begun before 2/15/2020

4. Reductions in Average Full-Time (“FTE”) Equivalency Highlights:
• Guidance issued to help borrowers specifically calculate the average FTE
• Borrowers can exempt employees from FTE reduction limitation if they:
– Rejected a written offer of rehire
– Were fired for cause
– Voluntarily resigned
– Voluntarily requested and received a reduction in hours
• FTE reduction safe harbor exempts certain borrowers from loan forgiveness reduction based on FTE levels

5. Salary/ Hourly Wage Reduction Highlights:
• Reduction to forgiveness when salary or hourly wages reduced by more than 25%
• Exclusion of employees whose annual salary exceeded $100,000 in 2019

Please note that we will be hosting a Webinar to discuss the updates to the PPP Loan Guidance and Forgiveness Calculations next Friday, May 29, 2020 at 11 a.m. (Eastern). Over the next few days, you will receive an e-mail invitation with more information and registration details. In the meantime, stay safe and let us know if we can be of service to you in any way.

Best Regards,
The Siegfried Advisory Team

Importance of Cash Flow Planning to Come Out of Covid 19 in a Position of Strength

Good Afternoon,

I hope you and your families are doing well and are healthy. I have fully adapted to the new norm of Zoom calls and I am grateful for the extra time I am getting with my family. However, I am hopeful to be able to return to the office and begin interacting face to face with people soon. Someone recently asked me what the most important area of focus is for businesses right now and I firmly believe it is strong leadership and quantifying and projecting your cash flow.

Leadership is more important than ever this year
Leadership is about doing the right things, which is more critical than ever in these times. As a Firm, we have much to offer in the area of Leadership, and we are interested in further exploring potential Leadership Advisory Support services with you. Specifically, we are interested in helping you and perhaps others Clarify & Simplify top Priorities to enhance Focus, Organization, Communication, Execution, and Innovation with respect to those key initiatives. We are very good at this and we are interested in trying to help if you are receptive.

Profits & Cash Flows are also very important this year
Most businesses fail to sufficiently quantify the implications of their decisions, and it costs them millions, which I believe is the essence of a quote by Michael Gerber. If you haven’t already done this, I highly recommend that you look closely at your cash flow and prepare a cash flow projection. A few key areas to think about:

1) Build up Cash. You should seek to understand your cash and working capital needs. I would encourage you to analyze your customers (allocation risk and creditworthiness), billing processes, your accounts receivable assumptions and collections, and your outflows for expenses and debt service. Historic data may not be as relevant now as income is down and collections could be slower. For example, you need to quantify what an extra 15 days of receivables could mean to your cash flow. I would also encourage you to look at ways to preserve and build up some cash.
2) Reduce unnecessary costs and manage expenses. Look at ways of reducing cash without impacting revenues. Review all costs and understand and quantify what costs you truly need right now. Negotiate credit terms.
3) Your bankers can be really good friends during this time. Need to understand and communicate with them and review your debt agreements and understand the terms and covenants. Look for ways to build cash through loans or lines of credit.

As a Firm, we also have much to offer in the area of profits & cash flows, and we are interested in further exploring potential Financial Advisory Support services with you. Specifically, we are interested in helping you in the areas of Profit & Cash Flow planning, enhancement, and analysis. This might include potential analysis around the ramifications from the Virus, including profit & cash flow planning and stress-testing various scenarios. So, if we can be of service to you in any way right now to build out some cash flow projections and provide some answers and possibly some peace of mind please let me know.

Jeffrey W. Mitchell, Jr, CPA, MT | Senior Vice President
Siegfried Advisory, LLC

New Ways the CARES Act Affects Individuals and Businesses

As additional details of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) become available, the list of potential tax benefits continues to grow.

Individual Taxpayers

Individual taxpayers are affected in a number of ways. Rebate checks, the so-called stimulus checks, are slated to be issued to individual taxpayers subject to income limitations. Between 2019 and 2018, the most recent filing will be used as a starting point for calculating the taxpayer’s benefit.

The IRS has also adjusted the treatment of some charitable donations. For example, $300 of a taxpayer’s charitable contributions can now reduce adjusted gross income instead of being subject to itemized deduction restrictions. Contributions made by individuals are also no longer limited to a percentage of adjusted gross income. For those who have turned to their retirement accounts for reprieve, certain early withdrawal penalties will be waived if funds were withdrawn for a “coronavirus-related distribution”.

Previously, individual taxpayers were not permitted to deduct more than $250,000 in combined business losses and married taxpayers filing jointly were limited to combined losses of $500,000. This limitation has now been delayed to 2021. Taxpayers whose excess business losses were limited in 2018 and 2019 may file for refunds.


Updates to the CARES Act are also impactful for businesses. The 2017 Tax Cuts and Jobs Act imposed limitations on the amount of interest expense a business could deduct. Deductible interest expense was limited to 30% of adjusted gross income. The CARES Act now permits business interest expense deductions of up to 50% of AGI for 2019 and 2020 tax filings. Additionally, taxpayers can treat their 2020 AGI as if it were the same as 2019 for purposes of applying the limitation.

Earlier legislation removed the ability for most businesses to carry back net operating losses to prior years. The CARES Act allows for NOLs arising in 2018, 2019, and 2020 to be carried back five years. The new law also temporarily lifts the requirement that net operating losses not exceed 80% of taxable income.

The original language of the 2017 Tax Cuts and Jobs Act inadvertently increased the life of qualified improvement property from 15 to 39 years, and did not provide a provision for bonus depreciation. The CARES Act corrected this drafting error, allowing QIP to be eligible for bonus depreciation. Taxpayers can proceed as though the current revision has always been the law and correct 2018 and 2019 returns previously filed.

We are still awaiting further guidance from the IRS as to how many of these changes will be implemented. As guidance is issued, we are actively analyzing all 2018 and 2019 filings to ensure that all of our clients are receiving the maximum benefit available under the changing tax laws. As always, please contact your Siegfried Advisory team member with any questions.

– Your Siegfried Advisory Team

Section 139 Tax-Free Payments to Employees

On March 13, 2020, President Trump declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the “Declaration”) due to extraordinary circumstances resulting from COVID-19. The Declaration allows employers to make tax-free payments or reimbursements to employees as “qualified disaster payments” under Section 139 of the Internal Revenue Code.

Qualified disaster payments must be used to reimburse or pay an employee for “reasonable and necessary personal, family, living or funeral expenses” incurred as a result of COVID-19. Payments to employees are not covered by Section 139 if they compensate employees for expenses that are otherwise compensated for by insurance or that are intended to replace lost income. As a result, payments for sick pay or family medical leave remain fully taxable to the employee. Although Section 139 has yet to be utilized for a national pandemic before, a reasonable interpretation of Section 139 would allow for the following to be considered qualified disaster payments as long as they relate to COVID-19.

Employee medical expenses not covered by insurance (i.e. employee deductibles and over-the-counter medications).
Funeral costs of an employee or a member of an employee’s family.
Costs associated with enabling an employee to work from home such as the cost of a computer, cell phone, printer, and supplies.
Child care for family members that are not permitted to attend school during the pandemic.

Qualified disaster payments are federally tax-free to employees and are fully deductible to the employer. There is no federal reporting or disclosures, so such payments are not reported on Form W-2 or 1099 and are not subject to federal income or payroll tax withholding. Generally, state treatment mirrors the federal treatment of qualified disaster relief payments as well.

The IRS is generally pretty lax on the requirements behind qualified disaster payments. There is no limit on the amount or frequency of qualified disaster payments that an employer can make and employees are not required to substantiate their expenses to prove that they are eligible. Furthermore, employers are not required to maintain any formal plan or documentation although we recommend employers do document the following:

The amounts paid and to whom.
The start and end dates of any Section 139 “program.”
A general listing of expenses that will be paid or reimbursed on behalf of employees.
Any maximum amount per employee or in the aggregate that the employer will pay.

Although Section 139 does not provide any additional tax relief to employers aside from allowing a deduction for amounts paid, it does allow them to assist employees in their time of need with tax-free payments. If you’re interested in learning more about making qualified disaster payments to your employees, please contact your Siegfried Advisory relationship coordinator.

– Your Siegfried Advisory Team

The above message is for informational purposes. Please consult your Siegfried Advisory contact or other advisor for further guidance in advance of undertaking transactions or making decisions with tax implications.

COVID-19 & Assistance for Small Businesses

Forced business closures and lost revenue as a result of COVID-19 are causing many businesses to face a severe cash crunch. One currently available avenue for relief is the Small Business Administration (“SBA”). The SBA is currently offering Economic Injury Disaster Loans of up to $2.0 million for eligible small businesses and not for profit organizations. Eligibility as a qualified small business varies by industry and is generally subject to average annual receipts or number of employee thresholds. Loans can be up to $2 million and may be used to cover payroll, fixed debts, accounts payable and other bills. Interest rates for small businesses are 3.75% and 2.75% for non-profits. Payment terms can be up to 30 years but are determined on a case by case basis.

Applicants for SBA loans are required to provide the following:
The last three year’s financial statements and tax returns.
The owner’s personal financial statements for the last three years.
The tax returns of any entity in which an individual has or had an interest of greater than 20%.
Accounts receivable and accounts payable aging schedules as of the loan application date.
Form 4506-T, which allows the IRS to share your data with the SBA.

The SBA highly encourages applicants to apply online, but the SBA notes that their website is experiencing heavy traffic and recommends applicants visit on off-peak hours. The website to apply is We highly recommend that that small business owners apply or gather the necessary information now if they think they will need SBA loan assistance as the approval process is being delayed. More information on whether your business will qualify for an SBA disaster loan can be found here.

In addition to the Economic Injury Disaster Loans mentioned above, there is proposed legislation in both the United States Senate and House of Representatives that would provide additional funding for small businesses to meet immediate financial obligations. Both proposals would also allow for portions of the loans to be converted to grants as long as the funds are used to keep employees on the company’s payroll. These proposed legislations have not been finalized and are subject to change. We will provide additional information as updates are available.

State and local government agencies are also providing additional relief options to small businesses. A few local examples are listed below. We encourage small business owners to check with their local and state commerce departments for additional information.
– Delaware Hospitality Emergency Loan Program (HELP) – Delaware is offering 10 year, no-interest loans for up to $10,000 per month for related companies in the hospitality industry. The HELP loans are available to companies with less than $1.5 million in annual revenues. More information can be found here.
– Philadelphia COVID-19 Small Business Relief Fund – The city of Philadelphia is distributing grants and zero-interest loans throughout the city to small businesses that have been impacted by the coronavirus. Businesses with less than $500,000 in annual revenue will be eligible for a $5,000 microenterprise grant. Businesses with annual revenue between $500,000 and $3 million will be eligible for small business grants up to $25,000. Businesses with annual revenue between $3 million and $5 million will be eligible for a small business zero-interest loan up to $100,000. More information can be found here.

As always, please contact your Siegfried Advisory Relationship coordinator with any questions.

– Your Siegfried Advisory Team