Being off, and promising a lighter than normal posting during the holidays was interrupted by the signing of Part II of the Cares Act Sunday, December 27, 2020 …. AKA Appropriations Act of 2021 (all 5593 pages here!)
Given the time of year we will keep this high-level and will expand in great detail shortly, but wanted to give you a couple important bullet points that may be very refreshing, and one call to action should you have not used PPP Part I but want either PPP Part I or II (Your window for both may be closing fast!)
Part II of the Cares Act – AKA Appropriations Act of 2021
PPP Part II has basically the same guidelines for the vast majority of folks in total amount, BUT with a qualifying hurdle to get PPP Part II threshold of having any one quarter of revenues/sales in 2020 being down 25% from 2019.
To clarify, if you as a business owner had only 75% sales revenue in any (just one) quarter versus that same quarter in 2019 you will qualify for PPP Part II.
What follows is most time sensitive, while we do not know anyone in this situation, you guys may and please share if you do.
If you or someone you know did not get PPP Part I but want PPP I OR II, they need to apply for Part I first … and there is a very limited pool of money. It is not possible to get PPP Part II without first getting PPP Part I. With a very limited pool of money for PPP Part I, it is possible that it may run out in short order, discrediting someone from getting PPP Part I and II …again please share at your leisure.
PPP is Forgivable and Tax Deductible for Appropriate Expenses
Some really good news on the tax front. This latest act clarified that businesses will be able to expense their loan proceeds along with forgiveness. Said another way, the loan will be forgiven if used appropriately, and the use of that loan will be allowed to flow through the Income Statement effectively allowing what Congress had originally intended, a double dip use of the money, forgiveness and tax deductions for appropriately used funds.
Stimulus checks – Break In – $600 Seems to be the Number but No Promises!
The most important thing to know from a high-level is if your income didn’t change much and you received a stimulus check earlier this year, it’s likely you will receive another.
The amount of the stimulus check is $600 (or $2000 – becoming more unlikely) and includes all parties including qualified children. As an example a husband and wife with two qualifying children would start out with four checks of $600 or $2400.
The phase outs are very similar, if not almost the exact same as the prior. Which goes to our original statement, if not much has changed and you received an original stimulus check you will probably receive another one but only around the most likely base amount of $600 per person amount.
BREAK IN – Literally as I was Working on this Post – The following hit my Inbox:
Treasury and IRS Begin Delivering the Second Round of Economic Impact Payments to Millions of Americans
WASHINGTON – Today, the Treasury Department and the Internal Revenue Service will begin delivering a second round of Economic Impact Payments to millions of Americans as part of the implementation of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021. The initial direct deposit payments may begin arriving as early as tonight for some and will continue into next week. Paper checks will begin to be mailed tomorrow, Wednesday, December 30. This second round of payments will provide critical economic support to those who, through no fault of their own, have been adversely impacted by the COVID-19 pandemic.
“Treasury and the IRS are working with unprecedented speed to issue a second round of Economic Impact Payments to eligible Americans and their families,” said Secretary Steven T. Mnuchin. “These payments are an integral part of our commitment to providing vital additional economic relief to the American people during this unprecedented time.”
Eligible individuals will receive an Economic Impact Payment of up to $600 for individuals or $1200 for married couples and up to $600 for each qualifying child. Generally, if you have adjusted gross income for 2019 up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, you will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced.
This second round of payments will be distributed automatically, with no action required for eligible individuals. If additional legislation is enacted to provide for an increased amount, Economic Impact Payments that have been issued will be topped up as quickly as possible.
The swift issuance of this second round of payments follows the successful delivery of more than $270 billion in CARES Act Economic Impact Payments earlier this year, providing crucial economic support to nearly 160 million Americans.
Later this week, you may check the status of your payment at IRS.gov/GetMyPayment. For more information about Economic Impact Payments, please visit IRS.gov/EIP.
This email was from about 5PM Tuesday evening December 29th …. reading todays news just before this post in the AM today, it is still not 100% what amount is going to be sent. Just FYI
Now back to our regularly scheduled Post!
Again we will expand on this in the coming weeks, but primarily wanted to deliver the message about the PPP Part I and PPP Part II scenario.
We apologize for interrupting your holiday season, but felt this was important enough to quickly alert and maybe share some good news to many on the Tax Write Off Front and call to action those that passed on PPP I and may want it or PPP II now!
Have a Great New Year’s … Thanks for your time!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
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Robert Kaplan Update – Round Table State of Economy – “Sooner Rather than Later!”
One of our favorite Federal Reserve Presidents Dallas’s own Robert Kaplan had another Round Table discussion the most recent Monday night….
Those with great memories may recall my fiasco when listening to his Round Table discussions and accidentally raising my hand for a live question…. good news, avoided that this time! haha
Elephant in the Room – Inflation or Not?
While leading with stats and updates, the review order has been changed due to the very end of the discussion and importance…
Recalling from the Mauldin SIC conference of the last two weeks and and once again here we are…. Elephant topic for Kaplan – Inflation or Not?
(Have you ever been on a call or virtual visit like this and wondered who else is on? – Am I wasting my time here? Or is this a good use of the late evening? – See callers below for answer!)
Live Callers
After about four or five live callers, the moderator announce, “Our next caller is Byron Wien!” – WHAT!
Wien is an 88 year old veteran of the Capital Markets and currently Vice Chair of Blackstone the largest money manager in the US!
What is he doing listening to a Dallas Reserve President at this time of the night – he is one hour later!
In a no nonsense, direct question, Wien asks or more insists “There is inflation and it is coming faster than officials think! What are you guys going to do?”
Kaplan answers directly that he thinks tapering monthly purchases along with increasing of rates should come “Sooner Than Later!”
This statement was repeated more than any other statement and even at one juncture, Kaplan stated “I said this in March and have seen nothing to change my view!” Sooner Rather than Later!
Kaplan goes on to say ” It is better to let off the accelerator and coast and possibly tap the brakes rather than staying on the accelerator and having to jam the brakes quickly!” We Agree!
Last up from the live call ins :
Robert Sakowitz – Concerns about shipping and port trouble- his personal example of $2600 pod now costing him $8000- (Has to be passed on somewhere? right?)
Based on our research and his question, most likely a multi generational retail magnate!
Both calls were concerning inflation, with several others concerned the FED has stayed to long and their mandate has been met!
Interesting Stats from Kaplan
2 million worker age 55 and over retired since Covid, dropping a valuable portion of the workforce
1.5 million women left workforce to care for children- Wow !
Texas and the surrounding Dallas Fed Area High School Superintendents on average graduate 85% of seniors and now only 60% – creating a shortage of skilled workers –
Taper and Policy – How can FED withdraw without market disruption? SLOOOOWLY
Learned from 07-09 – Telegraph in advance and give market time to absorb
What signals will use for taper – FOMC in Dec of 2020 agree that substantial further progress (Kaplan believes this statement is key and is very open to be used and interpreted many ways)
Input supply demand imbalances – metals, food, wages, PCE of April – June – elevated levels – uncertain of how long will persist
Believe inflation run at 2% and anchored there-
11 million barrels of Oil last year, thinks can only to to 11.25 million per day- fossil fuel here for decades longer, maybe not at the same level as prior but will not go away
Great Final Question from the Moderator
What Keeps Me Up at Night? (Recall same exact question of Buffet at annual meeting and the EXACT same answer)
“No textbook for this recovery, this is unlike any other recovery we have ever had- no prior example – We must manage the risk be nimble if possible !”
There you have it… Local Dallas Fed President echoing a lot of things we have been hearing, spoken of and discussed here!
Good News – Time will Tell and it will not be a long time (quarters, not decades)
Have a Great “Kaplan Update” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
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Posted in Debt - Debt Management, Economy, FOMC, Forecast, Interest Rates, Investing/Financial Planning, Market Comments
Tagged Byron Wien, Dallas FOMC, FOMC, Robert Kaplan, Robert Sakowitz, Roundtable