A Quick Summary of Coronavirus Related Tax Opportunities

A Quick Summary of Coronavirus Related Tax Opportunities

It’s been quite a year so far.  Wildfires in Australia, an impeachment trial of Donald Trump, the death of Kobe Bryant, and the Coronavirus pandemic.  Oh yeah, and don’t forget that it’s an election year.

Given the roller-coaster year it’s not hard to miss some of the tax planning opportunities that have arisen from the Coronavirus and the resulting stimulus legislation.

To help make sure you don’t leave any planning opportunities on the table, this post will review the top Coronavirus related tax opportunities for individuals.

Continue reading

The Economy Is Not The Stock Market

The Economy Is Not The Stock Market

So here we are….in the middle of a global pandemic.  Unemployment in the US is hovering around 15%.  Businesses are struggling to remain viable.  Hundreds of thousands of families…probably millions …are concerned they won’t be able to make their mortgage payments.

Yet, the stock market is closing in on all time highs set earlier this year.

How is that possible?  What gives?

The party line answers sound something like:

  • “Stocks prices reflect future earnings, not present earnings”
  • “COVID-19 is temporary, and our economy will return as soon as it passes”
  • “The market is just being manipulated by the Fed.  All that cash is pumping up the market”

All these are reasonable responses.  But they circumvent a very important concept that many of us seem to be forgetting recently:

The economy is not the stock market, and the stock market is not the economy.

Continue reading

Reflections on the Pandemic So Far

Reflections on the Pandemic So Far

We are currently somewhere around day 60 of our family’s quarantine, and the country is inching closer to reopening.  Over those 60(ish) days I worked remotely from home, and held a TON of meetings with clients, colleagues, and others over Zoom.  As you can imagine, everyone has handled the last two months a little differently.  Some investors are more comfortable with volatility than others.

I had a chance this week to think back on the sentiment in general.  How people are doing and feeling.  How they’ve handled the last few months.  What their financial situation is like right now.  And while everyone has handled quarantine and the Coronavirus pandemic differently, there are some trends I’ve noticed across many of my conversations.  I thought these trends might make an interesting blog post, so here are a few things that have been on my mind recently.

Continue reading

How to Get Your PPP Loan Forgiven

How to Get Your PPP Loan Forgiven

We’re now about six weeks into the CARES Act and in round two of the Paycheck Protection Program.  The $310 billion allotted to the program in round two is beginning to dwindle, but has lasted longer than most bankers expected.

There could be another round of stimulus that replenishes the program over the next few months, of course.  There seems to be widespread effort in Washington to ensure that businesses that need PPP funds are able to get them.  Who knows whether that will eventually happen.

For many of the businesses the most pressing question is no longer how they can access the program & obtain funds to keep their operations going.  It’s what must I do to have this loan forgiven?  This post will cover what we know so far.

Continue reading

Market Update: Q1 2020

Market Update: Q1 2020

Well here we are….one quarter into 2020, and the risk event we’ve all been waiting for has finally arrived.  Volatility as measured by the VIX Index touched all time highs over the first quarter as the Coronavirus spread from China to Italy and the rest of the world.

The stock slide here in the United States was fierce, but a late quarter bounce regained a substantial portion of the lost ground.  More ground, in my opinion, than the numbers really support.

From here, small cap and emerging markets are starting to look like wonderful bargains.  But without knowing the extent of the economic damage & how long the world will be sheltering in place, it’s difficult to make that argument with too much confidence.

Here’s this quarter’s market update.

Market Update: Q1 2020

Market Update: Q1 2020

Market Update: Q1 2020

Continue reading

The CARES Act: Implications for Individuals

The CARES Act: Implications for Individuals

As I’ve written about on the blog and covered on the podcast recently, the CARES Act is a big piece of legislation.  (Remember….the total package is $2.2 trillion!).  We’ve covered several sections of the bill and how it might impact you on the blog recently, including a deep dive into the paycheck protection program.

There are also many provisions in the bill we haven’t covered.  Specifically, sections relating to stimulus checks, expanded unemployment insurance, mandatory distribution holidays, penalty free retirement account withdrawals, and student loan relief.  Coincidentally, all have been commanding a large number of questions from clients of Three Oaks recently.

Like all legislation there is a great deal of gray area in this piece of legislation, especially given the urgency with which it was passed.  The IRS, SBA, Department of Labor, and other government entities are scrambling to provide relevant guidance as soon as possible.  So while there may appear to be some planning opportunities with regard to the law, it’s entirely possible they’re just a temporary mirage.  Nevertheless, here’s what we know now about the CARES Act and how it might impact you as a taxpayer.

Continue reading

The CARES Act Revisited

The CARES Act Revisited: Updates to the Paycheck Protection Provision

A lot has happened in the past week.  And now that we’ve had an opportunity to read through more details of the Paycheck Protection Provision, it’s become clear that the program’s rollout will be messy.  In fact, it already is.

Last week I wrote a post outlining a few of the provisions in the CARES Act meant to provide economic relief to small businesses.  What we’ve come to realize in the last few days is that the Treasury Department has a great deal of latitude in how these programs will actually be offered.

For example, the permits the Treasury Department to issue up to $349 billion of loans to small businesses through the Paycheck Protection Program.  Businesses with fewer than 500 employees can apply through an SBA approved lender for loans up to either 2.5x their average monthly payroll over the previous year, or $10 million (whichever is less).  The bill stipulates that the pay back period for the loans may be stretched out to up to 10 years, with an interest rate no higher than 4%.

Then, early last week, the Treasury Department stepped in and communicated that all loans will have a two year amortization period and 0.5% interest rate.  And on Thursday, Secretary Mnuchin announced another interest rate revision to 1%.

Continue reading

Unpacking the Coronavirus Stimulus Bill

Unpacking the Coronavirus Stimulus Bill

As you may have heard, the Coronavirus stimulus bill was signed into law by president Trump last week.  The package is called the CARES Act, and provides over $2 trillion of economic stimulus across a variety of channels.

My first thought here is sheer size of the package.  $2 trillion is a TON of money.  While at some point I’ll look into how the package will be paid for, I’ve spent more of my energy recently learning what’s in it.  The bill includes a mix of forgivable loans to small businesses, bailouts to corporations in certain industries, and checks mailed directly to taxpayers falling under a certain amount of adjusted gross income.

For many of our clients at Three Oaks Capital, there is urgency surrounding the relief opportunities for small businesses.  This post will cover the four sections I think are most relevant.  I’ll circle back and try to cover implications and opportunities for individuals in a subsequent post.

Continue reading

Where Do We Go From Here? Market Thoughts & Financial De-Leveraging

Where Do We Go From Here? Market Thoughts & The Risk of Financial De-Leveraging

Well that escalated quickly.  We are now officially in the second fastest bear market on record.  Bear markets become official when stocks fall 20% or more from their peaks.  Ordinarily this takes months to play out.  Bad news comes out, stocks sell off a bit.  Everyone goes home, thinks about it, and comes back the next morning.  More bad news comes out, stocks fall a bit further, and so on.  Here’s some data from Marketwatch on how long it typically takes to enter a bear market:

Where Do We Go From Here? Market Thoughts & Financial De-Leveraging

With the Coronavirus driving the U.S. and much of the world to shelter in place, our economy has come to a screeching halt.  Some forecasters are guessing that we’ll see a 5% drop in GDP this quarter, others are predicting as much as a 30% drop.

Whatever camp you reside in, the picture is not pretty.  Markets did not take long to notice.  Whereas it takes on average 136-137 trading days to enter a bear market based on the data above, it only took us 19 to get there this time – the second fastest on record:

Where Do We Go From Here? Market Thoughts & Financial De-Leveraging

So where do we go from here?  A stimulus package is just about to be passed (finally).  Markets rebounded as much as 12% yesterday and another 4.5% today.  Even though the public health picture still looks bleak, we are starting to wrap our heads around how long the pandemic may continue.

Here are a few things I’m reading and my thoughts on what happens next.

Continue reading