On April 30, 2020, the IRS provided guidance regarding deductibility for federal income tax purposes of certain expenses that are otherwise deductible expenses incurred in a taxpayer’s trade or business when receiving a loan under the Paycheck Protection Program. No deduction is allowed for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan under the CARES Act, and the income associated with the forgiveness is excluded from gross income under the CARES Act.
The official IRS Notice can be found here: https://www.irs.gov/pub/irs-drop/n-20-32.pdf
Other Related Resources:
U.S. Small Business Administration & Treasury Department Resources
- Paycheck Protection Program Frequently Asked Questions
- The SBA Paycheck Protection Program Website
- U.S. Department of the Treasury Paycheck Protection Program Website
- Webinar Recording & Resources: Paycheck Protection Program Loan Forgiveness Calculation (includes a planning spreadsheet for forgiveness calculation)
- The Paycheck Protection Program and Health Care Enhancement Act
Disclaimer: This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.