Скачать или смотреть PPP Loan Tax Treatment: PPP Loan Forgiveness

It is a good time to revisit some of the rules regarding the PPP loan tax treatment. Those of you who participated in the #payrollprotectionprogram will remember that the chief benefit of the program is to have the loan forgiven.

When the Cares Act was passed, there was a provision in the law that provided that the forgiveness of a #PPPloan did not give rise to taxable income. That changed the general rule of taxation, which provides that if a borrower has debt forgiven, the amount of the #forgiveness is taxable income to the borrower.

So the Cares Act changed that and there was no taxable income on the forgiveness of the loan. There continued to be some questions, though, because to get forgiveness, a borrower had to expend money on eligible expenses like payroll, for example. But you also know that the amounts
you spend paying your employees to give rise to deductions from taxable income.

Initially, the Internal Revenue Service took the position that to the extent that a borrower was using expenses to secure forgiveness on their PPP loan, those same expenses could not be used as tax deductions, reducing the taxable income of the borrower. That rule was also changed by Congress in legislation subsequent to the Cares Act, which provided that not only was the loan that was forgiven not taxable, but the expenses that were incurred by a borrower to generate that forgiveness could continue to be deductible against other income of the borrower. So the IRS's double-dip rule was changed essentially as the result of determination by Congress through legislation that was signed by the President.

So keep in mind, as you look at your taxable income for years in which you receive the PPP loan, the forgiveness of the loan does not give rise to taxable income, and you can continue to claim the expenses that you incurred that supported forgiveness as reductions of income, the same as you have in every other year.

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