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R
rambem
Level 3
February 27, 2021
Question

1120S Guidance on Reporting Forgivable PPP Loans

  • February 27, 2021
  • 1 reply
  • 5 views

I have seen threads here that address this issue, but have conflicting information.  Some believe yet-to-be forgiven loans remain a liability on the tax return, while others say that it is considered tax-exempt income.  I have seen no guidance from the IRS yet.  Has anyone seen anything set in stone on this or are extensions the only option at this point?

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1 reply

IRonMaN
IRonMaN
Level 15
February 27, 2021

Why would you do an extension for that?  At least for the federal, it is tax exempt income so even if you choose wrong, you aren't creating a tax liability in the wrong year.  Personally, I'm going with the logic that if the loan wasn't forgiven in 2020, you still had a loan at 12/31/20 and the tax exempt income won't hit until 2021.

Slava Ukraini!
    R
    rambemAuthor
    Level 3
    February 27, 2021

    I have a couple of clients whos' shareholder distributions will become taxable as capital gains if the loan is not considered income in 2020.

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