What Dentists Need to do to Qualify for a New PPP Loan in the Next Round of Stimulus

Art Wiederman, CPA Eide Bailly LLP 657.279.3243 awiederman@eidebailly.com

 

The Transcript

Art Wiederman, CPA And hello, everyone, and welcome to another edition of the Art of Dental Finance and Management with Art Wiederman, CPA. I'm your host Art. After 61 years of life, you should know how to say your own name. I'm your host, Art Wiederman. It's nice to be with you on this Sunday evening in Southern California, December the 13th. As we've told you, we're now just about nine months into our COVID-19  pandemic and we're date stamping these podcasts. And I've been waiting every single week to see what Congress is going to do. And I want to report to you for this week. This one will be published on Wednesday the 16th.

We may have a package by then. We have to have something done by the 18th, it looks like. But we're going to get into all that detail. But what I want to share with you tonight is a bunch of things. I want to share with you, some information about the current proposals and why it's going to be important for you to start gathering information on your revenues from 2019 and 2020, because there is a very good chance that we're going to have a stimulus package that's going to open up an additional amount of PPP money to everyone.

So the CPAs of the world, our nightmare will continue for maybe another year. But that's a good thing for those of you who have been harmed by this pandemic financially. So we're gonna talk about the stimulus packages, we're going to talk about the what we think is going to happen and what you need to do to get ready for all of this and your forgiveness.

We're also going to talk about the HHS Provider Relief Fund, and they've come out the Department of Health and Human Services has come out with rules on what exactly you have to have and provide. And I'm going to walk you through the calculations. Now, if you are the CEO or COO of a hospital or a critical care unit or a whole bunch of nursing homes, you may have to go get a master's degree in how all this works.

I will tell you that the folks at my firm, which is Eide Bailly, I'm a dental director at Eide Bailly.  The folks at Eide Bailly are going absolutely bat crazy over these reporting requirements. However, for dentists, I think it's going be a lot easier. So we're going to talk about that. We're going to talk about some final year-end tax planning things that I don't know if we've touched on before, but I just want to make sure you're ready for the end of 2020. So we're going to get a whole bunch of different things.

I want to give you some information first. I want you to go on to our partner Decisions in Dentistry website, which is www.DecisionsinDentistry.com. Decisions in Dentistry is one of the clinical magazines in the country, if not the best. They have amazing articles and continuing education courses. Here's some of the courses you can get.  By the way, you can, for one low price, you can get 140 courses at the touch of your computer. At the touch of your computer, you can go 140 courses for one very low annual price. But these courses are examples. These courses are Infection Control Considerations for Electric and Air Driven Handpieces. This one is a CE course sponsored by Colgate, which is called Improving Health with Digital Dentistry and then Laminar Impressions for Unsupported Maxillary Tissue.

That's that word I practiced at three times before I was going to read it maxillary tissue. So I apologize for anybody who is a fan of maxillary tissue if I screwed up that word. But anyway, www.DecisionsinDentistry.com.

Also folks, if you're looking for a dental specific CPA anywhere in the United States, that is www.ADCPA.org. And we have 24 member firms of which Eide Bailly is one of them. We represent over 10,000 dentists. Eide Bailly represents close to 800 dentists. And we've got pretty much every resource you're ever going to need in our firm. Every single day, I've been part of this firm for the last four months. I'm finding new things that these people do that I didn't know that they did. So, but if you're looking anywhere in the country, that is where you want to go www.ADCPA.org.

Well, folks, before I get into our topic tonight, you know that I'm a founding member of our Academy of Dental CPAs and they're my family, they're my professional family, and I am very, very tight with many of them and I have to report some very sad news about our family. We lost a member of our family, and this is a very, very special member. About 20 years ago, when we formed this group, we had nine people in a room with a table and two pitchers of water, and there were nine of us who came in. I'm not going to mention all the names, but one of them was a guy from Baltimore by the name of Allen Schiff. And Allen's the only one who walked into the room with boxes and boxes of marketing materials. And none of us had anything more than a pad of paper and a glass of water.

And it was very obvious from the beginning that Allen had a passion for the accounting profession, that he worked in as a CPA as well as a passion for working with dentists. So as we got this group formed, we started having meetings. You know, most of our spouses who came to the meetings, they would come and they would maybe go around town and see what was going on in the different cities. But at every single meeting, Allen's wife, Cindy Schiff, was at the meetings. Now, Cindy was a member of Allen's team, was his right arm, his wife, certainly. And she was at every meeting taking notes, taking pictures of everybody.

Well, I am very, very sad to report that we lost Cindy a week ago Friday. I knew Cindy was ill. Cindy had come to the meetings and she was not well. You could tell, she wasn't really able to speak very much, but she had that wonderful smile on her face. So I got a call from my dear friend Allen, who's one of my dearest friends in the whole world a week ago Saturday morning. And it was actually text. And I kind of knew what it was. I was afraid. But then he called me and said that Cindy had passed away and he had never mentioned to any of us what Cindy had. And it turned out that Cindy had ALS, which is Lou Gehrig's disease, which as, all of us know, is a horrible, horrible, debilitating disease that just basically has no cure.

And Cindy was diagnosed, I said, in the Cindy was diagnosed about three years ago. And Allen and I are both Jewish and in the Jewish religion, when someone passes away, you do what's called Sitting Shiva. And usually that's 10 people coming over to a home and praying and remembering the individual. And obviously, we can't do that now with COVID. So we had a virtual Shiva and there were over 100 people on there. And Allen asked me to say the first group of words about Cindy. So I will tell you what I said.

Every single time I saw Cindy at one of our ADCPA meetings, she never had a frown on her face. She was always smiling. She was always happy. And every single time during a break, she'd walk by me. She would grab me without exception. She would hug me and hold me for five, 10, 15 seconds and just say, I love you so much. And that's what she did. And she was one of the most loving human beings you would ever meet.

And she helped the ADCPA with a lot of administrative tasks. And the most amazing thing and Allen is our president. The reason I'm taking the time on this podcast is because Allen, during this pandemic, has been a spokesman for the American Dental Association. Allen has done webinars with upwards of 10 to 15,000 people, educating all the dentists on PPP and the rules and what was going on. And I was doing that. But Allen was doing it for the American Dental Association. And as I think about it now, the fact that Allen was even functioning during this last year, that he was taking care of Cindy, he never let on about any of it. The man is a saint.

And for those of you who are, who knew Allen, or clients of Allen, we have a lot of listeners on the East Coast. We have a lot of listeners. And for those of you who are, who know Allen, who are friends with Allen, who care about Allen, I would like you to maybe make a donation to the ALS Foundation. And we will put the information in the meeting notes for today's podcast.

But I just want to tell you that Cindy was a loving, wonderful, kind human being that just loved people. And my heart is broken, as is all the members of our Academy. And again, for those of you, I know that there are clients of Allen's in Baltimore, which is where he's from, who knew Cindy very well, who are clients of Allen, friends of Allen, who have listened to Allen lecture, maybe you, Allen lectures regularly at the University of Maryland Dental School. If you are a student listening to Allen, drop him a line, let him know you heard this news, because maybe not everybody has heard it.

But Cindy, God bless you. I love you. And we all love you. We will miss you very, very much. And Allen, just so you know, the entire dental community is here for you to help you if you need us.  How you made it through the last two to three years, taking care of Cindy and you were taking care of her every single day, I know that, is and doing all you've done for your clients, your family and the dental profession. And God bless your boys, Jordan, Michael and Eric and Cindy will be missed. So I wanted to talk a little bit about Cindy on the podcast today.

Alright. Let's move on to our topic, which is we're going to talk about the stimulus bill and what's going on and maybe, maybe, maybe we're going to have a deal.

So here's kind of where we're at folks. Alright. It's Sunday night. Congress is going to recess for the holidays, probably on the 18th, which is next Friday. Okay, so what we have is we had negotiations and more negotiations and talking and nothing was going to happen before the election. And we all knew that because nobody wanted to budge. Nobody wanted to flinch because they were afraid that if they made a move, it would affect the election. The election is over. What we have now is we're now at the end of the year and we have a lot of things that are going on, folks.

First of all, you have to realize that job growth is down. The jobs report was bad for the month of November. It came out last week. I think there were, you know, it was maybe half of what people had hoped. Six in 10 people have been impacted financially by this pandemic. I handed out food about a week ago at a local high school in Southern California with two of my best friends in the world who have been involved in a wonderful charity. And we basically took boxes of food, perishables and nonperishables, and hand sanitizer and masks. And we basically, my job was to open the trunk, put the boxes in the car and hold up signs in several different languages wishing Merry Christmas, Happy New Year and just, you know, a ray of hope for people. And they were all very appreciative.

So this is going on all over the country. Unemployment benefits are going to end for about 12 million people at the end of this month, as is the provisions for evictions. Now, as you may or may not know, landlords have been forbidden in evicting people from their apartments by federal law, and they are still, to some extent in some states. But the federal guidelines for avoiding evictions is going to go away. So that is going to be an issue and there's going to be tens of millions of people who could be evicted from their apartments.

So it's not good. They need to do something. They need to put some money back in the economy. As we know, COVID has spiked big time. We're averaging now upwards of 3,000 deaths a day. We're probably going to hit 300,000 deaths in this country tomorrow or the next day. And it's not good. The hospitals are overflowing. They have to do something and they know they have to do something. The problem is, is that they've got some issues.

So let me tell you what we got going on here. A couple of weeks ago, they have this group called the Gang of Eight, which are eight senators. I believe they're senators. And so if I'm not, I will be corrected. But the Gang of Eight are eight members of Congress who put together a 908 billion dollar bipartisan stimulus package. And I want to share with you some of the things that are in that stimulus package.

So in that stimulus package, you've got, I have it over here. Okay, here we go. So I've got, first of all, in this 908 billion dollar package, which is the one that everybody seems to believe has the most traction to get passed. 160 billion dollars as the basis for good faith negotiations for state and local governments. Here's what's going on. And the reason we don't have a deal is this, is that the Democrats want state and local funding. That's what they want. Because, again, you know, people work for the state just like they work for restaurants or they work for nail or hair salons.

So they want funding for these state governments. Like one of my best friends is the legal counsel for a major museum. And he says, Art, we got 1.7 billion, 1.7 million dollars a month we're having to burn through to keep the museum, you know, operating and not getting kicked out of our building and everything like that. And they're having to look at their endowment funds and things. And that's where state and local government aid would be helpful.

The Republicans want liability protection. So the reason that that's important to the Republicans and especially to Mitch McConnell, who's in charge of the Senate on the Republican side, and they have the majority there, is they want to make sure that if an employee is working in a business, any business and they contract COVID-19, that they can't just say, oh, well, because I was working, I am going to sue you. And so both sides are kind of bartering over that topic. It's the wording.

We may see a bill that comes out that has everything else that's been agreed to by the minute. And it may just say that, you know, on liability protection and state and local government funding, we're going to table that until January and we're going to see if we can come to an agreement then.

So on unemployment, this 908 billion dollar stimulus bill. And I'm reading from the the latest summary we have, which is about a week ago, there's no law that we have been provided yet with any of the details. It'll extend all pandemic unemployment programs by 16 weeks from their expiration at the end of December. So remember, whatever unemployment was going on, it's done at the end of December.

Number two, federal supplemental unemployment benefits will be expanded for 16 weeks by 300 dollars a week. So if you remember, they gave people 600 a week back in March, which motivated people to stay home. And a lot of the you know, a lot of people were upset about that because it basically, employees were making more money by staying home than they were by working. Well, 300 is kind of what they landed on. So 300 is better than nothing. That's 1,200 dollars a month. Plus, remember, that's only Federal.

The state will also pay you amounts of money for unemployment benefits and that could be 500 to a 1,000 dollars a month. Who knows? It just depends on the state that you're in. So that could be very, very helpful for people.

And there would be a billion dollars for state systems, for technology modernization and fraud protection. And basically that's what we would have there. Now, here's the next thing. And this is having to do with the PPP program. So as you all know, there was one hundred I'm sorry, 349 billion dollars was put out for the PPP program in March. Of that amount, about 130 billion was not spent. People kind of soured on the program. But there's all that money is there. And I suspect they're going to use that money as part of this whole bill and they're going to fund potentially a second round of PPP.

So 300 billion dollars would go to small to the SBA to fund a second Paycheck Protection Program funding to, I'm going to read this to you. Funding to allow the hardest hit small businesses to receive a second forgivable Paycheck Protection Program loan. Eligibility would be limited to small businesses with 300 or fewer employees that have sustained a 30 percent revenue loss, here's the important words, in any quarter of 2020. Now, let's think about that. 30 percent revenue loss. Let's think about the dental profession, because you're thinking about your restaurants. Restaurants open, then they close, and they open and they're open for takeout. Then they're open for 25 percent capacity indoor and then they're open for outdoor dining. They're all over the place.

The dental profession is pretty consistent as far as what happened in 2020. The dental profession shut down for the most part on March 16th, the week of March 16th. And what happened was, is that they opened up pretty much somewhere between May 15th and June 15th, probably most, a lot of my doctor's open June 1st.  So eight to 12 weeks. So what quarter is that in? That's in the second quarter. So in the second quarter of 2020, many of my doctors had revenues that were not down by 30 percent. They may be down 50, 60, 70 percent because they weren't open.

So many of you will qualify. Now, again, the devil's in the details and we don't know what's in the details. They're going to provide some additional benefits for 501c6 organizations, which are specific types of not for profits. Now, they're going to add that forgivable expenses are not only the four topics that we've been talking about for nine months, which is payroll, rent, utilities and interest costs. But it will allow you to also have forgiven expenses to include supplier costs and investment in facility modifications and PPE to operate safely. So that will be helpful. Business expenses paid for with the proceeds of PPP loans are tax deductible. Huge folks, huge. Consistent with congressional intent and the CARES Act.

That was the intent. They just didn't write it into the bill. So this basically gives us deductibility on PPP. As you know, right now, if you listen to my podcast every week, what's happening with PPP is that you got a loan. It's forgivable, Okay, but the government says since we're giving you free money, then we're not going to let you write off the expenses. So that's where we're at right now. So for every tax projection that we've done, we've added back 50, 75, 100, 300,000 dollars, depending on how big your PPP loan was. This would make it deductible.

There is humongous bipartisan support for this. Treasury Secretary Mnuchin is absolutely drawing a line in the sand, saying we are not changing our position. And the only way to make PPP expenses deductible is if Congress passes a law. On January 20th or maybe sooner, Janet Yellen is going to be, I think it's the first week of January, actually, she will become the Secretary of the Treasury.

Now, Janet Yellen is a really smart lady. She was the head of the Federal Reserve. Really, really, really smart lady. So she might say, you know what, guys, reverse it. If Congress doesn't pass anything, reverse it. I guarantee you she's going to have lots of new friends in the restaurant industry, the CPAs, the lawyers, the accountants, the dentists, the physicians, everybody out there is going to be lobbying and has been lobbying for this.

They're going to go ahead and the other thing that's really huge here is right now, if you have a PPP loan that is less than 50,000 dollars, you should be filing for forgiveness. Use a form 3508S. It's a two-page form. You basically have to just show that you used 60 percent of this money for payroll costs and that's it. You're done.

You don't have to have proof that you had the same number of full-time equivalent employees at the end of your covered period. You don't have to have proof that you kept everybody on payroll and you did reduce their hourly wage or salary by more than 25 percent.

Rules that the SBA still hasn't given us all the detailed guidance that we need on and probably never will. As far as I'm concerned, I'm not holding my breath. And if the loan is under 50,000 dollars, it's easy. So this bill, if passed in its form, would simplify the process for borrowers with loans of 150,000 or less. I would say that if I took a poll of all of my listeners, I'm going to tell you that 80 to 85 percent of you have PPP loans of less than 150,000 dollars. And so we might have the form 3508S just might now. They'll just put a one in front of the 50 and make it 150,000.

That's why, folks, there is no rush to file for PPP forgiveness. If you're under 50,000, I would say file and get it over with. It's no big deal. And I do have many clients who have filed. The banks right now are moving pretty quickly because they don't have a lot of loans in. If you wait to file for forgiveness and remember, you have 10 months from the end of your covered period. So if you're under covered period was, say, October the 15th of 2020. You have till August 15th of 2021 to basically file for forgiveness. Well, if you wait until August 1st, it's going to take forever. So I would say let's wait this week, because again, folks, if they're going to do something, okay, if they're going to do something, they're going to do it by this Friday.

Now, Senator Joe Manchin, who's a Democrat, he was interviewed this morning on Chris Wallace's program on Fox News. And he was basically taking the position that right now Senator McConnell is the one kind of holding, he's a Democratic, Republican. And I'm not getting into politics again, folks. But he saying, you know, it is Mitch McConnell who is kind of holding the line because he wants the liability protection if Senator McConnell backs off on that much better chance, we're going to go and get a deal.

There's a lot of people who are in Congress that are saying we can't leave Washington, we cannot leave Washington without a deal. So I think this is my prediction. I think that by the time you hear this, which will be on Wednesday, I think that they will either come to a deal. And one of the things that could very well happen is they could put this 908 billion dollar program up for a vote tomorrow, the 14th Monday. And they could see they may be able to get it passed, who knows? But they want to see where they're at. That's a possibility. May happen. May not happen.

But they are they have been negotiating all weekend. They're continuing to negotiate. The speaker of the House, Nancy Pelosi, has come out and said, we're getting closer. Mitch McConnell has said we're getting closer. You know, it's funny when you get to know how Congress works. And I'm not going to pretend that I'm an expert at it. But when something is really important and they did put the government ceiling to fund the government, they extended it for a week. So they're going to have to do that.

So they do nothing else. They're going to have to extend it or the government will shut down. And we don't even want to talk about what happens if that happens. But these folks know they are very, very you know, it's partisanship at its worst. But the fact of the matter is, they know they have to do something because if they don't get the aid out there, okay, something bad is going to happen. People are going to, I mean, there's going to be food shortages. People are not going to eat. People are going to get kicked out of their apartments. It's bad, it's going to get worse. And they know that there has to be a stimulus program. If there's not one by now, I don't know, February, March. We'll see.

The other thing that's out there is something that was presented by Secretary of the Treasury Mnuchin. And basically it's a 916 billion dollar proposal. But this one is different. This has a 600 dollar per person stimulus check going to everybody. Remember back in March with the CARES Act, everybody got 1,200 dollars who were under I think was under 100,000 of income for single and 200,000 of income for married filing joint. They all got 1,200 dollars.

So that is in there because that's what that proposal says. And this is from the Republicans, if you will. But there's no unemployment boost. So that one is favored by, I think the White House and by, you know, Mark Meadows, who's the Chief of Staff, and Steve Mnuchin, who's the head of the Treasury. So, you know, we have that one coming down the road. And, but everybody that I've been listening to thinks the 908 dollars billion proposal by the Gang of Eight is the one that's got the most traction. That's what Megan Mortimer from the ADA has been telling me. She is e-mailing me. And she sent me a text the other day that basically said, I just want to get off this roller coaster, make a decision, do something.

Well, if it's going to happen, folks, it's going to happen this week. And if it does and we do get a new law, I will report to you on the podcast that's going to come out on the 23rd, which is going to be a week from this Wednesday. So I've got guests, I've got great guests coming up on this podcast. We're going to be talking about tele dentistry, we're going to be talking about, you know, more of my consultant friends telling you what you need to know about making your practice better. More on cybersecurity. And we just got all kinds of great topics to share with you to make your practice better. But I'm holding, I told my team at Eide Bailly, I said, if there's a stimulus package, I do have to report on it.

We're going to get into the HHS Provider Relief Fund in a second. But I do want to remind you of one thing here. So we are putting on at Eide Bailly. Actually, I'm kind of the quarterback here. We are putting on a year-long webinar series for six local dental societies where I am in Southern California. And we started on December 9th. We did a, you know, we had a nice big crowd listening, talking about tax planning and the research and development tax credit.

But we're kicking it off next year. We're doing three programs. We're doing a 12-month program called The Business of Dentistry. It's going to be on the management consulting, student loans, financial planning, retirement planning, hygiene, metrics, just things to make your practice better and more profitable with some of the experts in the world. It's not going to be just me. I only know so much folks. So basically, it's going to be a bunch of experts.

We're going to start off on, it's going to be the second Wednesday of every month. So put that on your calendar. January 13th, we're starting off with Kiera Dent, who is a consultant out of Reno, Nevada, who I recently met and has got more energy than the Energizer Bunny. More energy than Patrick Mahomes of the Kansas City Chiefs. I watched him today. He threw three interceptions today, which is more than he's thrown all season. He started with 32 touchdowns and two interceptions. He threw three interceptions. Two of them were tipped. So they weren't necessarily his fault. But if you ever watch Patrick Mahomes play quarterback, it is it's just fun to watch. Well, this lady Kiera Dent has energy like Patrick Mahomes does. And Allen Schiff, my dear friend in your honor, also has as much energy as Lamar Jackson, quarterback of your beloved Baltimore Ravens.

That was one cool thing, too, that they did for Cindy, for Cindy Schiff. I got a picture of it. They actually put, because they've been season ticket holders forever. They actually put a photo of Cindy up on the Baltimore Ravens, big, you know, mega scoreboard inside the Ravens stadium. And that was very cool. I mean, she was very, very well thought of, as I mentioned to you earlier.

So on January 13th, we're going to have Kiera Dent and then we're going to have in February, we're going to have my dear, dear friend from the Academy of Dental CPAs, Kristie Boltz, talking about marketing. She's another one that I've had. She's come to California twice, lectures. She's my Peloton buddy. I'm approaching 300 rides on my Peloton. Very excited about that, getting stronger and stronger. And she's going to talk about marketing and she's just unbelievable. We have a whole great group of speakers.

So that's the first Tuesday of every month, I'm sorry, the first Wednesday, the first Wednesday from 6:00 to 8:00 Pacific Time. It will be recorded and on our website. January 20th, we're going to start our four-part transition series. So if you are thinking about buying a practice or you're thinking about selling your practice anywhere in the next five years, ten years, whatever, you need to listen to this. So we're going to start off with my really good friend, dental specific attorney Patrick Wood.

Pat's here in Irvine. He's as good as it gets. Pat really knows his stuff. He's been doing this for 30 plus years. He's going to talk about all the legal aspects of transitions. And that series will be the 3rd Wednesday of every month. And then on January the 26th, I believe it is, is our first, is going to be our first new dentist series. We're going to do two webinars for new dentists, dentists just buying practices, dentists who are thinking about buying practices or starting practices. And we're going to talk about how to use Quick Books.

We're going to have, we're going to teach you a brand new system, what system should you have when you're setting up a dental practice, scheduling recall, financial arrangements, what you need to do from a labor law standpoint, one of the best labor laws in the country is going to be with us on that webinar.

So if you want to participate in these webinars, if you want to listen to them again, 6 to 8 p.m. California time, go to www.EideBailly.com/dentalseries and it'll take you to a registration page. It's free, doesn't cost you anything and you get a lot of really, really good information. So I want to make sure that we talk about that.

Okay, let's move on and let's talk about my second favorite thing, which is the HHS Provider Relief Bill. The HHS Provider Relief Fund. So I'm going to give you a little overview again. I had a conversation with Tyler Bernier from our firm. Tyler is an audit partner in Oklahoma City. Really smart guy. I say this every time I talk about somebody from Eide Bailly, I always say really smart guy and really smart lady. Just it's unbelievable all the all the new friends I have who are much smarter than I am most days.

So Tyler has kind of been our champion of the firm in dealing with the HHS Provider Relief Fund. Now you have to remember that for dentistry, it's easier, much easier. Our firm also has a whole division that takes care of, other than taking care of about seven to 800 dentists. We have a division that works with hospitals and critical care units and nursing homes and things like that. And the rules for those folks are just, you know, you just want to bang your head against the wall because they're very, very complicated.

But for the dentists, I think it's going to be pretty easy. So let me kind of walk you through it. I've got on my computer screen that I'm going to go through with you here is what do you have to do here? So basically, if you want to look at this, you want to look at Google 'General and Targeted Distribution post payment notice of reporting requirements dated November 2nd of 2020'. And if you just put that in there, you'll probably be able to get to this.  For anybody who got more than 10,000 dollars from this program. And that's going to be many of you. This is something that you should read. It's going to talk about the reporting requirements and the general overview of how this works.

So let me walk you through this, because I have a really much better understanding for dentists now that I've done a little more reading and I talked to Tyler. So basically, here's what happened. All of you who applied for this money got 2% of your gross receipts of 2019. So if you have a million dollar practice you got about 20,000 dollars. Now, folks, remember, this is 20,000 dollars that went into your practice. It should have gone into your practice. It is intended for you to use to fight or deal with, if you will, the COVID-19 virus and the pandemic. And it is taxable income. Where is the money you get for PPP that you don't have to pay back is not taxable. It's a forgiven loan. This is taxable income. So if you got 20,000 dollars, it's taxable.

So what are you supposed to do with this money? Well, there's two things you're supposed to do with this money. Number one, you're supposed to use this money to pay for, quote, health care related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse, which may include general and administrative expenses or health care related operating expenses. And we're going to get into how the PPP loan plays into this in a minute.

Anything that you can't justify for health care related expenses, you are allowed to use this money to make yourself whole as far as lost revenues. Now, they started with calculations of lost revenues that a CalTech or an MIT graduate couldn't figure out. But I think they've kind of brought it down to a simple phase, which is basically what you do is you look at your 2019 revenues in your dental practice and you look at your 2020. And the difference is going to be if you don't use this money, I'm going to give you a mathematical example in a minute here.

So, the bottom line is, you know, this is kind of like Jeopardy! I give you the answer and then you give me the question. Well, the answer is I don't think it's going to be much of a problem for most of you to spend this money and to justify that you spent it on what it was intended for. So those are the two things here. So let's, I mean, you're going to have to, there's going to be a portal that's going to open up around the first, second week of January, again, unless they extend the time for this because they have not said they're going to do it yet.

You're going to have to give them some demographic information. It's going to be in the PRF reporting system. Will allow HRSA and the United States Department of Health and Human Services HHS to assess whether recipients properly used provider relief payments consistent with the terms and conditions. So you're going to give them the type of reporting entity you are, your ID number, your national provider identifier, NPI number, that's optional fiscal year end date, federal tax classification, you're a sole proprietor, limited liability company, et cetera.

Okay, so now they talk about expenses attributable to coronavirus not reimbursed by other sources. So expenses attributable to coronavirus may be incurred both in treating confirmed or suspected cases of coronavirus preparing for possible or actual coronavirus cases, maintaining health care delivery capacity, et cetera.

Okay, so there's two categories that they let you use. In this in this particular section, if you receive money between 10,000 and 499,999, you'll have to report your health care related expenses, net of other reimbursed sources. Again, payments received from insurance and or patients, which that's really none of you are going to have to apply for that.

So G&A expenses, any additional mortgage or facility that you have. Well, most of you have the same facility, premiums for property, malpractice business insurance or other insurance relevant to operations. Again, probably not going to affect you. Additional personnel you had to hire. Well, you guys probably have had to hire fewer people if your practice didn't come back, but I don't think you had to hire more people because you have to deal with coronavirus. You just have to wear more PPE and change your protocols.

More fringe benefits, lease payments, utilities or operations or other G&A. I don't think most of you are going to have G&A expenses, but if you do have additional people, maybe you hired someone to help you with IT or something like that, then you would put that down. Then you have health care related expenses attributable to coronavirus and they define it in a footnote here in this in this notice as noted above, expenses attributable to coronavirus may be incurred in both direct patient care and overhead activities related to treatment of confirmed or suspected cases of coronavirus preparing for possible or actual coronavirus cases, maybe maintaining health care delivery capacity, which includes operating and maintaining facilities, et cetera.

So basically, you know, you're allowed whatever expenses you had because, you know, you are basically providing dental services, but you are preventing COVID-19 by taking all the steps with PPE and aerosol changes in your practice and UV practices that you've undertaken. So you qualify for this.

So, number one, you get to use the supplies. Now, these are these are PPE expenses paid for purchase of supplies used to prevent. Prepare for, that's you, you're not. Again, remember, dentists don't prevent COVID-19 other than by saying that you come into the dental office, you won't get COVID-19, but, you know, prepare for or respond to the coronavirus during the reporting period. Such items could include personal protective equipment, hand sanitizer or supplies for patient screening.

So what I have heard, the way this is going to work is it's going to be your incremental cost. So here's the example. Most of you go into the operatory. You know, the dentist, the assistant, the hygienist, goes into the treatment room and you're wearing, before COVID a paper mask and gloves. And, you know, if you have a uniform, you're wearing a uniform. If you're wearing street clothes, you're wearing street clothes or maybe doctor's in a suit and tie, whatever it is.

So with COVID-19, you're now basically wearing a paper mask, you're wearing a N95 mask, you're wearing a face shield and you're wearing gloves as usual, as well as a gown of some sort. So everything except the paper mask and the gloves are to fight coronavirus because you would already been doing that, so you'll have to keep track of those expenses.

Second is equipment. Expenses paid for purchase of equipment used to prevent, prepare for or respond to a coronavirus during the reporting period, such as ventilators, updates to HVAC systems, etc. So any equipment, most of my doctors, my million dollar producers, probably spent somewhere between 5 and 15,000 dollars on this stuff. So and they were going to make you depreciate it to figure out how much you could apply. Well, that went away real quickly when everybody started yelling and screaming, especially the CPAs, because it was pretty ridiculous.

So you might have gotten 20,000 dollars and maybe 10 to 15 of it is spent just on the equipment that you bought. Here are three other subjects, three other categories, information technology, expenses paid for IT or interoperability systems. I got that one right. Interoperability systems to expand or preserve care delivery during the reporting period, such as electronic health record licensing fees, telehealth infrastructure. If you upgraded your bandwidth in your system to be able to do telehealth to your patients while you were closed, that's covered. Increased bandwidth and teleworking to support remote workforce. So, again, most, in our CPA practice, I've been working at home for 9 months now, with the exception of 4 or 5 days. Kind of hard for you to do dentistry out of your house.

But you might have had people while you were closed working at home and you might have set them up at home and maybe you bought them some equipment, I don't know. Facilities, expenses paid for facility related costs used to prevent, prepare for or respond to the coronavirus during the reporting period, such as lease or purchase of permanent or temporary structures, probably not going to be you guys, or to modify facilities to accommodate patient treatment practices revised due to coronavirus. For example, the plexiglass that you put in your front office to block you from your patients from the front office. That is a deductible expense. Keep track of that.

And then other health care related expenses, any other actual expenses that previously captured above that were paid to prevent, prepare for or respond to the coronavirus. So think about anything that you spent and start gathering your information. The second. So let's say I got 20,000 dollars and it turns out I spent 12,000 dollars on coronavirus related expenses that we just talked about. You still got 8,000 dollars that you got to justify. So the way you're going to do that is through the lost revenue calculation. Very simple. Here's what you're going to do.

You're going to go ahead and you're going to take the amount of money that you that you're collections worth for 2019. You're going to subtract 2020 and presumably it's going to be lower. So let's use a mathematical example. Alright. And I'm going to go off of Dr. Wiederman because that is that's what we do here. Dr. Wiederman is the example. I get lots of mail saying that I'm Doctor Wiederman. So basically the way this works is that let's say Dr. Wiederman got 20,000 dollars from the Provider Relief Fund. Dr. Wiederman spent 10,000 dollars. Now this is through calendar 2020 because remember, if you don't spend all the money in 2020, you got one more shot, which is six months in 2021. Yet you're going to have the portal's going to open January 1st, two weeks in January probably and you have until February 15th to report.

So Dr. Wiederman got 20,000 dollars in HHS Provider Relief Funds. He spent 10,000 dollars on PPE specifically to fight coronavirus. What I was just talking about. He spent 5,000 dollars on an air purification system for all of his treatment rooms, so he spent 15,000. So that leaves 5,000 dollars. In 2019, Dr. Wiederman, so he's got 5,000 to justify.

Now you could spend another 5,000 on PPE and do a second reporting or you can avoid the second reporting by looking at your reduced revenues. So in 2019, Dr. Wiederman got a million dollars and had a million dollars in revenues. In 2020 he had 850,000. He's down 15 percent, which is about where most of my folks are as far as revenues go, because you were shut down for a month and a half or two months, shut down for two to two and a half months.

What we have to do though, is to that 850. We have to add the fact that Dr. Wiederman got a 90,000 PPP loan and he got a 10,000 dollar EIDL grant. So he got 100,000 in aid. Now you also have to add any money you got from state and local governments, there are a lot of cities and counties all around the country and we have listeners in every state and I think 65 countries. And, you know, those folks might have gotten a, I mean, the city of Dayton, Ohio, might have given you a 10,000 dollar grant because they got, they had some money in their operating fund that they were helping small businesses in Dayton, Ohio, or it could be in Oklahoma City, or it could be in, you know, Santa Fe, New Mexico or wherever it is.

Okay, so if you got that additional grant, you have to add that to this total. So Dr. Wiederman collected 850 in 2020 90,000 in PPP loans. I have to add that in and 10,000 EIDL grant. So his total collections for this purpose are 950. Remember folks that he collected a million dollars in 2019. So he's got an additional amount. He's had a loss of revenues according to this calculation of 50,000 dollars. Well he only needs 5,000 of that because that 5,000 dollars is the amount he didn't spend on supplies and the purification system. So he's going to be fine.

Now we do have doctors, I've had several of them, who are actually going to be at or near or even over where they were. They have just picked up. It was like it was an 8 week vacation. They just picked up where they left off and the pent up demand they were seeing 120 140 percent of what they were seeing before the pandemic. So for those folks, you might not have any reduction in revenues. I'd say that's going to be 10 percent of you maybe. I hope it's more, but I don't think so.

So then if, you know, the worst thing that happens is you'll have to go and spend that money in the next six months or maybe you buy some additional PPE equipment at the end of the year. So you should start gathering all of your calculations and your revenues as far as being able to determine what you spent and be ready to do the reporting. It'll be all done on a portal via computer. I don't think you're emailing anything in. I don't think it's going to be a big deal for most of you. But you do need to start doing those calculations to see if you're going to be able to spend this money, because if you don't spend this money by June 30th of 2021, you're going to have to give some of it back and you don't want to do that. So that's kind of where we are on PPP.

Again, we got great opportunities, folks, to possibly get some more government assistance. But again, the devil's in the details. And like I said, I am holding next week's podcast, the one that's going to be out on the 23. If we get a stimulus bill that is passed and if it has a lot of details, I will be all over this for you because that's what I do and I will let you know what's going on. We will probably do a webinar for our dental clients and we'll certainly invite all of our listeners to that.

But, you know, again, if you're not a member of, if you're a CPA is not a member of the Academy of Dental CPAs, you may not get this information unless you listen to the podcast. So this would be a great time to think about switching over to somebody who really understands the dental profession. We will be more than happy to help you at Eide Bailly and anybody else in the ADCPA or we're all going to be you know, in fact, I would be surprised if our president Allen, who I've been talking about on this podcast, calls a Zoom meeting of the group to talk about what the new stimulus looks like. I don't know. We'll have to see what happens.

Okay, so I got a little bit left I want to share with you today and basically just a little more about a little more about year-end tax planning. Just kind of reiterate this, because we're now in December and you've still got time to make moves. So number one, if you're going to buy some equipment and Henry Schein, Patterson, Benko, Pearson, all those Darby, all the companies, they're ready. They know you're coming. They're stocked up. They're stocked up on digital scanners. They're stocked up on dental chairs. They're stocked up on CAD cam machines, digital X-ray, lasers, CBCT, you name it. They got it. They got it for you. They'll sell it to you. It has to be placed in service before the end of the year.

Make sure if you're an S corporation and you buy a bunch of equipment before the end of the year, that you check with your CPA and just ask this one question, CPA, do I have sufficient S corp if you're an S Corp. S corp basis to take this tax deduction this year? Very important.

Here's an example. If I'm an S corporation and I have zero basis in my s corporation interest and I go out and I get a bank loan from Bank of Wiederman, everything's Wiederman of course. Bank of Wiederman for 100,000 dollars to buy a CBCT machine. I place it in service like Art said on December 24, maybe December 27th. December 24th is a day for golfing or something like that. And you know, we place it in service and the next thing we know our, you know, our equipment rep says, yeah, you going to get a tax deduction.

Well, you don't get s corporation basis for a bank loan. You get it if you put the money in personally. But if you don't, you may get a very, very bad surprise because your equipment rep isn't an accountant. Not that they're a bad person. They're just an accountant. So ask your CPA if you're a partnership, sole proprietor, you will get basis. Why the rules are that way? I don't know. I didn't make them. A lot of people say they're silly, but that's the way they are. So number one is equipment.

Number 2 pension plans. Folks, if you want to set up a pension plan and you haven't done it before the end of the year, you have until the end of the year. All you need to do. So you get let's say, and I'm finding a lot of clients, they're having a lot of money sitting in their accounts at the end of the year because they got the PPP money, they spent it, they got an EIDL loan, they got the HHS money. They haven't been paying as much payroll. They haven't been spending as much personally. So I got doctors with who had 100, 150, 200,000 in the bank account but never had that kind of money before.

So, you know, if you've got money that is not borrowed money and we don't like borrowed money to do this, but if you've got money from this year, what you want to think about is a retirement plan. All you need to do, you can't. It's too late to set up a Simple IRA for this year just too late, because you had to have done that by October 1st because there are certain legal notices you have to give out to your employees. But you could set up a profit-sharing plan with a 401k component before the end of the year.

I've got a doctor who's setting up a defined benefit cash balance, defined benefit plan before the end of the year. He's going to put a half million dollars into it. He says, I can do that? I said, A-ha, you can and I'll help you. So, you know, I don't invest the money. I don't do investment management. Our firm does, but I don't. But we help get the plan set up and all this kind of stuff.

So, you know, these are the types of plans. So if you have 50,000 dollars that you could put away, maybe we talk about that. So talk to your CPA, they can hook you up with a third party administrator. If they don't know how to do that, call some, call one of us at the Academy of CPAs or call me and we'll get you all hooked up and everything with the right people. So pension plan is number two.

Putting your kids on payroll is number 3. Now you can put your kids on payroll as long as they provide legal services for you. I mean, we have lots of teenagers that stuff envelopes. And, you know, some of these kids, who I mean, my joke that I've said on the podcast before is that I have I had children not because I wanted to raise children, because I wanted to have the fulfillment of having children watch them grow up into good adults, which my two boys have done. But I had children in order for them to teach me technology and how things work and how I could get on to Instagram and learn someday how to do Facebook and all this stuff.

Well, you know, these kids are really sharp. They can help you with your website. They can help you with your social media marketing. And I do see that happening in some of my practices. And you can pay kids up to 12,400 dollars without taking out any taxes because the standard deduction is 12,400 dollars. So if you do that and you are in a 37 percent marginal tax bracket, federal and maybe a 13 percent state, the highest tax bracket, you could save half of that money in taxes, it could be a nice deal. And you can take that money, maybe give some of it to the kid to do whatever they're going to do. And you say to the kid, listen, kid, don't call them kid, call them by their names. You say, listen, why don't we have a deal? We're going to take, you know, three quarters of this money or two thirds or one half of this money. And you can spend it on whatever you want. And the other part is going to get spent on your college fund.

And depending on how reasonable your kid is, they might just go for that. You might have to do some negotiating. You might have to be some mediator, maybe a retired judge to help you negotiate with your 12 year old. But you can figure it out. So that's another thing.

Another thing you do is buy an automobile before the end of the year if you use it. Now, remember, here's the rules, you only have to use that automobile for business purposes for the time you own it. So if you buy an automobile on the 29th of December and the only thing you do is drive to see your CPA or drive to a, you know, to the bank or drive to a lab or drive somewhere else, you might be able to justify 80 percent business usage.

Now, you may not next year, but you can justify business usage. If you buy a car that's over 1 thousand, I'll be alright. That's a bicycle or. No, that's a that's a moped maybe. If you buy a car, that's over 6,000 pounds GVW, which is ground vehicle weight, its GVW, I think it's called. Got to be careful. Make sure that you get the right statement from the car dealer. It's either in the owner's manual or it's on the side door of your car, the driver's side, front door. You'll find that information.

If it's over 6,000 pounds, you can take 100 percent bonus depreciation. If you're an S corporation, ask your CPA. Do I have S corporation basis for this or do I not? And you have to plan for that. But that's another way to do it. If the car is less than 6,000 pounds and you don't want to drive an F-150, or you don't want to drive a Tahoe or an Expedition or one of those big 6,000 pound cars then you can get a deduction of up to 18,000 a little over I think it's 18,800 dollars for 2020 times the business percentage, which I never recommend that you take more than 100, more than 100 percent, more than maybe 80 85 percent business usage because again you know, don't take 100 percent, by the way, don't do it because if you do it, the IRS auditor is going to tell you, no, no.

The only way you get 100 percent business usage out of your car, folks, is if you buy your car, you drive it directly to the office, you park it at the office, and then you drive another car to work. And then when you do your business driving, you go from work in that new car to wherever you're going to go. And then you come back. If that's what you do, if you are that crazy to do that, then you'll get 100 percent business usage if you want to take 100 percent business usage, because your buddy at the Dental Society did it and he didn't get he got away with it. Well, you know, that's another conversation for another day. So automobile is another thing you can do in the last couple of weeks of this year to save some taxes.

And the last thing I want to share with you today on taxes is donating appreciated stock. So let's say that Dr. Wiederman here. Dr. Wiederman, I use this, I made this up all by myself. Some people think I'm funny sometimes. Some people don't. So Dr. Wiederman likes fruit and Dr. Wiederman only buys stocks that have the name of a fruit in it. You might see where I'm going with this. And Dr. Wiederman, since his first name is A, started with A for the fruit.

So he decided that he was going to buy a stock that was a stock with the word Apple in it. So he bought some Apple stock back when the iPhone One came out in the late 80s in the late 1800s folks, that's when it came out. That's what I heard. The first iPhone came out back then. No, it didn't come out back then, but that was my futile attempt at humor.

So he bought it and he's got a 100,000 dollar gain. If I basically sell the stock and I pay 20 percent, let's say 15 percent federal tax and five percent 10 percent state tax, that would be what it is in my home state of California. So if I do that, then I've only got 75,000 dollars left to donate to my charity. What you want to do instead is you want to take that stock and you want to donate it directly to the charity.

So you give to your church, your dental school, you give them 100,000 dollars worth of Apple stock. And it doesn't matter how much of a gain you have in it, you will pay no income tax on that stock. You will get a full 100,000 dollar tax deduction for the donation of that stock. Now, there is one rule you must follow. You must have held that stock for at least a year and a day. Okay, so don't give stock. Maybe you bought Zoom at the beginning of the pandemic that's gone up eight zillion percent and you want to donate that. If you've only held that stock for seven or nine months, don't do it because you will be limited to your basis, what you paid for it, so the stock that you donate to charity has to be, should be appreciated stock and you must hold it for a year and a day. If you do that, then you will get a full 100,000 dollar deduction.

There's another thing out there called donor advised funds where you can donate to, a lot of this is done through brokerage firms. Let's say you want to put 100,000 dollars in, but you don't want to give it out this year. You'll dole it out a little later. You make the donation now, you get the deduction now. And then down the road, the person in charge, the donor advised funds who you have say in will go ahead and dole that out. So that's something your investment adviser can go ahead and help you with.

So I, yeah, it's funny. I always worry when I do my own podcasts whether I'm going to have enough stuff to talk about. But it just seems to take that hour. And again, I want to tell everybody how appreciative I am. We've got so many kind comments. And, you know, I had one specialist who sent me an email and he basically said, he said, Art, if it weren't for you, I wouldn't have gotten a PPP loan for 103,000 dollars. And by the way, Art, it saved my practice.

And that's really gratifying to hear. And I've gotten lots of kind words, as have all of our members of the Academy and the folks here at Eide Bailly. We're here to get you through 2021. We're going to get you through the second round of PPP. We're going to get you through the filing of forgiveness.

If you are selling your practice, must file forgiveness, you must file for forgiveness before you sell. And you must put the amount of money from that equates PPP loan from the sale into an interest-bearing escrow account. You have to do that. So if you have any questions you can certainly call me at 657.279.3243 or you can email at awiederman@EideBailly.com.

Again, don't forget to go on to our website for all these great webinars we got coming up in 2021 www.EideBailly.com/dentalseries. Again folks, if you feel inclined, if you knew my good friend, you know my good friend Allen Schiff and his late wife Cindy, make a donation to the ALS Foundation. We will put that information in the show notes.

Other than that I think I'm good for today. I hope all of you have a wonderful week. It's going to be, it might be the last full week of the year for many of you. Work hard and remember my five words saying, which is failure is not an option. This is Art Wiederman for the Art of Dental Finance and Management signing off. Have a wonderful week and we'll see you soon. Bye bye.