PPP Loan Forgiveness Statement

Forum|Forum|4 years ago
February 10, 2022
2 replies
23 views

In section 4.1 PPP Loan Forgivenss Statement, why are there both 2020 taxable year and 2021 taxable year? What does the year 2020 and 2021 mean there? Thank you.

Lacerte Tax

This topic has been closed for replies.

abctax55

Level 15

Ummm... loans were forgiven in both years.

Pick the one that applies to your client.

HumanKind... Be Both

M

misskeikoAuthor

Level 4

I don't think it means forgiven year.

If the loan is forgiven in 2020, it should be treated as tax-exempt income in 2020 tax return, not 2021.

We can treat PPP as tax-exempt income:

1=as expenses are paid or incurred

2=when forgiveness is applied for

3=when forgiveness is granted

Couls Law

Level 4

I asked this same question on Tuesday and no one could answer. It doesn't make any sense to talk about how 2020 was handled on the 2021 return.

IRonMaN

Level 15

"It doesn't make any sense to talk about how 2020 was handled on the 2021 return."

Since when does the IRS have to make sense? If you remember, first the loans were taxable and then they weren't. And then there were was, if they know they were going to be forgiven, do we show them as forgiven in 2020? So, just put the information in as asked. If the loans were forgiven in 2020, type in 2020. If they were forgiven in 2021 type in 2021. There is no need to try and over complicate things.

Slava Ukraini!

M

misskeikoAuthor

Level 4

That's similar to what I planned to do. I think what matters is the result, which is PPP is nontaxable for federal.

I put PPP1 in the 2020 section and PPP2 in the 2021 section since I wanted to separate two PPP loans. I treated both of them as tax-exempt income in 2021 based on different rules-PPP1 is as forgiveness was applied in 2021 and PPP2 is as expenses were paid in 2021. So I need two different boxes.

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