Special Rules for Self-Employed (Schedule C Taxpayers)


In addition to the permitted use of  Paycheck Protection Program (PPP) funds, a sole proprietor may use PPP funds for owner compensation replacement per the following guidelines below: 

Owner compensation replacement for a sole proprietor is defined as 2019 Schedule C net profit (limited to $100,000). 

Steps to calculate the loan forgiveness amount:  

  1. 2019 Sch C net profit (up to $100,000). 
  2. Multiply amount calculated in step 1 by 8/52 to represent 8 weeks of profit. 
  3. Reduce amount calculated in step 2 by any qualified sick or family leave amount for which a credit was claimed under the Families First Coronavirus Response Act. 

Additional guidance from the SBA will be provided for self-employed individuals who were in business on 2/15/20 but were not in business in 2019. 

Review the CARES Act Overview


Contact Our Team: 

Tene Thomas, CPA
Partner
Tax and Small Business
Solutions
TThomas@mjlm.com