IRS Puts Foot Down on Paycheck Protection Deductibility, Drawing Congress’ Ire

“For plan advisors and small businesses that may have taken advantage of forgivable loans under the Paycheck Protection Program (PPP), in new guidance the IRS digs in on its position regarding the deductibility of covered expenses. But that may not be the end of it.

If you’ll recall, the IRS advised in Notice 2020-32, released April 30, that it will not allow a tax deduction for an expense that is otherwise deductible under Code Sections 162 and 163 if the payment of the expense results in forgiveness of a covered loan under the PPP.  

The new guidance—in the form of a Revenue Procedure and Revenue Ruling—takes that one step further by addressing whether a PPP loan participant that paid or incurred certain otherwise deductible expenses can deduct those expenses whether the loan is forgiven or not.” Continue reading.

Source: National Association of Plan Advisors
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