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  • 1.  Second round of Sec. 1112 payments

    Posted 03-05-2021 04:20 PM
    I have a client (Partnership) who owns a rental property and has a mortgage.  The partnership received a second round of Sec. 1112 payments made to pay the mortgage.  Six payments were made by the SBA.  The 1098 form shows all the interest paid including the interest paid by the Sec. 1112 payments.  Are the payments received by the partnership to pay off part of the mortgage to be considered as income to the partnership?

    If anyone knows the answer I would greatly appreciate it.
    Thank you.​

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    Joseph Schnitzer
    CPA
    JOSEPH SCHNITZER, CPA PC
    Woodmere NY
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  • 2.  RE: Second round of Sec. 1112 payments

    Bronze Most Valuable Member
    Posted 03-06-2021 08:09 AM
      |   view attached
    The Section 1112 payments are not taxable income.  I would think that this is tax exempt income much like the EIDL grant and PPPL with the interest expense deductible by the borrower.

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    Jennifer Lynch
    Garden City NY
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    Original Message


  • 3.  RE: Second round of Sec. 1112 payments

    Posted 03-06-2021 07:20 PM
    These payments were the second round of Sec. 1112 payments.  So you think these are not taxable also?​

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    Joseph Schnitzer
    CPA
    JOSEPH SCHNITZER, CPA PC
    Woodmere NY
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    Original Message


  • 4.  RE: Second round of Sec. 1112 payments

    Posted 03-07-2021 08:23 AM
    I didn't realize that you attached the SBA Information Notice.  Thank you for your advise.  I really appreciate it.
    Stay well.

    Joe​

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    Joseph Schnitzer
    CPA
    JOSEPH SCHNITZER, CPA PC
    Woodmere NY
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    Original Message


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The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.