What is the best way to enter a PPP loan that is forgiven in an Exempt Organization?

Forum|Forum|5 years ago
July 6, 2021
2 replies
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I have an exempt organization client that received a PPP loan that was forgiven as it covered payroll cost. There is no specific entry info that I can find for entering this into an Exempt Org. return. Does anyone have a good idea? I thought of just putting it to Government contributions, but as it was forgiven I'm not sure that is correct. Thanks in advance for the help.

Lacerte Tax

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qbteachmt

Level 15

I would start here, to see what is described:

https://proconnect.intuit.com/community/corporation/help/how-to-enter-forgiven-ppp-loans-in-lacerte/00/118854

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K

KevinLeeAuthor

Level 2

Started there and it was no help as they do not address Exempt Organizations.

qbteachmt

Level 15

"it was no help as they do not address Exempt Organizations."

Those references do, however, provide comparative info for how it would be treated. Example:

"Forgiven PPP loans and EIDL grants are considered "Other Tax Exempt Income" for federal purposes"

I don't know if your client entity follows FASB or GAAP or? Filing 990 or 990EZ?

There are lots of references on the web, including tracking the income associated with each period in which you tracked the related expense, if that applies (crosses year ends).

Examples:

https://www.aicpa.org/content/dam/aicpa/interestareas/frc/downloadabledocuments/tqa-sections/tqa-section-3200-18.pdf

https://www.untracht.com/news-insights/vantagepoint-newsletter/accounting-for-ppp-loan-forgiveness/

https://claytonmckervey.com/accounting-for-ppp-loan-forgiveness/

https://www.pncpa.com/insights/accounting-for-ppp-loans-forgiveness/

https://www.njcpa.org/article/2021/01/05/3-approaches-for-reporting-ppp-forgiveness-on-financial-statements

Since there is no Business Code for these funds, I like "Government grants equivalent to contributions" which makes it similar to specific agency grants (SBA administered). That's line 1c.

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