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Community Champion

Latest IRS guidance on PPP loan

Newest guidance from IRS on Nov 18 not reallly new at all.


We all knew from back in May that eligjble expenses paid witb PPP loan funds could not be classified as a tax deductible business expense no matter what and this "new" guidance does not change that other than to the effect that after the fact if your loan is not forgiven or you choose not to apply for forgiveness that you can file an amended return in the future but cannot expense the unexpensible until then, meaning not at all in 2020.


What was not addressed that clearky should have been is the fact that advances on EIDL although not requiring payback are deducted from your PPP forgiveness, leaving you to repay an amoun that does not have to be repaid. Surely that amount will show up in a 1099 from DC

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Community Champion

Latest IRS guidance on PPP loan

By now you all know something about the December stimulus bill tied to the omnibus spending bill recently passed by Congress but NOT yet law.


IF it happens, it appears that several things related to PPP loan forgiveness may happen. Keep your fingers crossed>keep in mind that it is not yet law

  • allowable expenses paid by PPP funds WILL be tax deductible
  • allowable expense list is expanded (at least for second round)
  • second round of PPP loans LIMITED to those business that experienced at least a 25% DECREASE in gross receipts (not net income) for any quarter in 2020 plus 1st quarter in 2021 (won't be able to apply until at least then) COMPARED to same quarter 12 months prior
  • EDIL advances will no longer be deducted from forgiveness amount and anyone already having had that deducted in their forgiveness would be made whole
  • and the kicker, for which I am a little shocked to say the least and still need clarification- FORGIVENESS OF PPP LOAN WILL NOT BE TAXABLE INCOME (although partnerships including LLC and S corp will add that amount to their basis)

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