PPP Loan Forgiveness Update
The IRS issued information late last Wednesday “clarifying” rules for deducting expenses that are eligible to be paid with Payroll Protection Pram (PPP) funds.
Although Congress clearly intended for the PPP to be tax-free, the IRS did not follow congressional intent. A month after Congress created the PPP last spring and provided that forgiveness of loans under the PPP should not result in taxable cancellation of indebtedness income for the recipients, the IRS ignored congressional intent by issuing a notice saying that the expenses funded by each such a loan should become nondeductible the moment the loan is forgiven — thereby resulting in exactly the same net tax costs for loan recipients as would have been the case if Congress had not exempted the forgiveness of the loans from tax.
Last week the IRS issued Revenue Ruling 2020-27 saying that even if a taxpayer’s PPP loan has not yet been forgiven … Read More