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What fields will be added to tax returns as it pertains to PPP loan forgiveness?

Forum|Forum|5 years ago
October 19, 2020
1 reply
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Since the banks are being told not to issue 1099-Cs for PPP loan forgiveness, how will that information be tracked in the tax return? It's my understanding that the rules associated with forgiven debt still apply.

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Best answer by sjrcpa

"It's my understanding that the rules associated with forgiven debt still apply."

So far they don't for PPP loans. The loan forgiveness is not taxable.

But the expenses paid with the PPP loan money are not deductible (as of today 10/19/20).

I have no idea what, if anything, will be added to tax forms. I don't think many people will get PPP forgiveness in 2020. I think it will be a 2021 event.

sjrcpaAnswer

Level 15

"It's my understanding that the rules associated with forgiven debt still apply."

So far they don't for PPP loans. The loan forgiveness is not taxable.

But the expenses paid with the PPP loan money are not deductible (as of today 10/19/20).

I have no idea what, if anything, will be added to tax forms. I don't think many people will get PPP forgiveness in 2020. I think it will be a 2021 event.

The more I know the more I don’t know.

F

fymvirtualofficeAuthor

Level 2

Thanks! I know the forgiveness applications will start soon, but you make a goo point that the actual forgiveness decision won't happen until 2021.

qbteachmt

Level 15

Forgiveness update from last week:

https://www.sba.gov/sites/default/files/2020-10/PPP%20--%20Loan%20Forgiveness%20FAQs%20%28October%2013%2C%202020%29.pdf

"In its answer, found in Q&A No. 4 in the General Loan Forgiveness FAQs section, the SBA explains that borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from the loan’s origination, depending on the borrower’s agreement. But the SBA also reminds borrowers that loan payments are deferred only until 10 months after the last day of each borrower’s loan forgiveness covered period.

For example, the SBA wrote, a borrower with a covered period that ends Oct. 30, 2020, has until Aug. 30, 2021, to apply for forgiveness before loan repayment begins."

IRS notice for not including expenses for tax purposes when they are paid by PPP funds:

https://www.irs.gov/pub/irs-drop/n-20-32.pdf

You will see the payouts on deposits referred to as "grant advance loan" because there was no intent to report it for taxes, apparently.

Lender instructions not to report this as Loan or Debt forgiveness:

https://www.irs.gov/pub/irs-drop/a-20-12.pdf

This is a developing scenario, as usual.

You can watch all of this for yourself by bookmarking the SBA and IRS sites.

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