Hannah Erickson, LTP and receptionist for Devon A. Gaines, CPA, PC, has been featured in a Central Oregon Community College student success story! Read full article
Update – New legislation introduced on Tuesday May 5 that would allow a deduction for ordinary expenses funded by the Payroll Protection Program. See article for details
IRS issues guidance on the forgiveness of PPP loans
On 4/30/20 the IRS issued a ruling in Notice 2020-32 regarding the taxation of forgiven PPP loans. While advertised in the CARES Act any forgiveness of PPP loans would be tax free the IRS has ruled any corresponding expense would not be deductible under IRS Code S. 265. “Specifically, this notice clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)”
While the good news is the forgiveness of the loan is not taxable the bad news is the expenses are not deductible either. This may or may not reduce the incentive to use PPP loans over unemployment if you cannot keep your employees working.