[Fredslist] PPP Forgiveness IRS Update

Fri Dec 4 12:51:56 UTC 2020

Good morning,

For those who have PPP loans , the IRS has issued Revenue Ruling 2020-27 which provides:

A taxpayer that received a covered loan guaranteed under the PPP and paid or
incurred certain otherwise deductible expenses listed in section 1106(b) of the CARES
Act may not deduct those expenses in the taxable year in which the expenses were
paid or incurred if, at the end of such taxable year, the taxpayer reasonably expects to
receive forgiveness of the covered loan on the basis of the expenses it paid or accrued
during the covered period, even if the taxpayer has not submitted an application for
forgiveness of the covered loan by the end of such taxable year.

Simply stated, if you reasonably expect to receive a forgiveness in 2021, you may not deduct the
expenses paid in 2020 that were paid from the loan proceeds.

This is obviously  not good for any of us business owners
– and Congress need to fix this.

There will also likely be litigation on this position if Congress fails to act.

Stay Tuned!

Sincerely yours,
Vincent J. Russo, JD, LL.M, CELA*
|
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*Certified Elder Law Attorney by the National Elder Law Foundation which is not affiliated with any governmental authority. Certification is not a requirement for the practice of law in the State of New York and does not necessarily indicate greater competence than other attorneys experienced in this field of law.
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