Brentwood NY Employee Retention Credit Under The Cares Act

 
Can you take the employee retention credit on the earnings paid of your S corporation to you, the 100% owner? Now, this is a big debate in the tax professional neighborhood today. I'm not going to hang my hat on any one position until we get more explanation from the IRS on this, however if I had to lean one way or the other, I would lean in the instructions of stating that owner earnings in so far as we're speaking about somebody who owns more than 50 percent of the service, do not qualify.
  
 
Just how It Functions
I don't desire to get too technical here, however Area 2301(e) of the CARES Act -- which produced the employee retention credit -- states that for purposes of the employee retention credit, "rules similar to the guideline of areas 51(i)( 1) and 280C(a) of the Internal Profits Code of 1986 will use," do not get caught up on the 1986, that's simply the last time the Internal Revenue Code had a major overhaul, so it's simply described as the Internal Revenue Code of 1986. The vital part here is those other code sections recommendation.

Let's begin with 280C(a) since that's the simple one. That is just saying that if you get a credit on some salaries you pay in your company, you can't double dip and take a deduction for those very same earnings. Now let's talk about area 51(i)( 1 ), which says, "No earnings will be taken into account ...

with respect to regard individual who person any of the relationships described in subparagraphs (A) through (G) of section 152Aread)( 2) to the taxpayer, or, if the taxpayer is a corporation, to an individual who person, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation, or, if the taxpayer is an entity other than a corporation, to any individual who person, directly or indirectly, more than 50 percent of the capital and profits interests in the entity." So let's focus on the stipulation that states "if the taxpayer is a corporation" because we're assuming an S corp taxpayer here.Let's focus on the stipulation that says "if the taxpayer is a corporation" due to the fact that we're assuming an S corp taxpayer here.That is simply saying that if you get a credit on some salaries you pay in your company, you can't double dip and take a deduction for those exact same salaries. Let's focus on the clause that states "if the taxpayer is a corporation" since we're assuming an S corp taxpayer here.

So this is stating that you don't consider salaries with regard to a person who owns, directly or indirectly, more than 50 percent in value of the impressive stock of the corporation. This is stating that you do not take into account incomes with regard to a person who owns, directly or indirectly, more than 50 percent in worth of the exceptional stock of the corporation. That seems clear to me that owner salaries do not qualify. Now, some tax professionals are looking at the employee retention credit qualified incomes FAQs on the IRS site, and they're taking a look at FAQ 59, which says, "Are salaries paid by a company to staff members who belong individuals considered certified earnings?

" and they're stating, "Look at the response here. It's just these family members whose salaries don't count. And the IRS didn't particularly state owner incomes or partner earnings don't count here, so bad-a-boo, bad-a-bing, for that reason owner salaries need to count." To that, I would state, "Look. The IRS site is not the tax code. That appears clear to me that owner incomes do not certify. It's only these relatives whose salaries don't count. The IRS website is not the tax code.