• Restaurant Revitalization Grants

    New law: Under ARPA, eligible restaurants, food trucks, and similar businesses may receive restaurant revitalization grants from the Small Business Administration. (ARPA Sec. 5003)

    Amounts received as restaurant revitalization grants are not included in the gross income of the person who receives the amounts. (ARPA Sec. 9673(1))

    No deduction or basis increase is denied, and no tax attribute is reduced by reason of the gross income exclusion in ARPA Sec. 9673(1). (ARPA Sec. 9673(2))

    In the case of a partnership or S corporation that receives a restaurant revitalization grant, any amount of the grant excluded from income under ARPA Sec. 9673(1) is treated as tax-exempt income for purposes of Code Secs. 705 and 1366. (ARPA Sec. 9673(3)(A))

    Since the restaurant revitalization grants are treated as tax-exempt income, they will be allocated to the partners or shareholders and increase their bases in their partnership interests.

    IRS will prescribe rules for determining a partner’s distributive share of the grant for purposes of Code Sec. 705 . (ARPA Sec. 9673(3)(B))

    Under the single-class-of-stock rule, shareholders receive allocations of tax-exempt income from the restaurant revitalization grants in proportion to their ownership interest in the S corporation.

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