Level 2

Expenses paid with PPP funds

Forum|Forum|5 years ago
November 12, 2020
3 replies
18 views

What can anyone tell me about deductability of expenses paid with money from PPP loans. It's my understanding that as it stands now, no deductions for 2020 expenses covered by PPP money (even if loan is forgiven it's a separate thing.) I know many have hoped this would be addressed. Can anyone tell me the status - whether deductions are dis-allowed if paid with PPP money?

This topic has been closed for replies.

abctax55

Level 15

As of 11.12.20 - the expenses are not deductible. Whether they are *not deductible* in 2020 if the loan forgiveness doesn't occur until 2021.... better minds than mine are debating it on other forums with no consensus of opinion.

Stay tuned for changes to that if/when Congress decides to play nice together & doing some of the work we pay them to do.

If not resolved by filing time... extensions may be wise.

HumanKind... Be Both

qbteachmt

Level 15

"Whether they are *not deductible* in 2020 if the loan forgiveness doesn't occur until 2021.... better minds than mine are debating it on other forums with no consensus of opinion."

But the point is, you also are not reporting it as Income. There is no Income to report and no deduction to report. That's the benefit.

Don't yell at us; we're volunteers

abctax55

Level 15

Michele - not exactly.

The fact it isn't income is not questioned. The original intent was that the expenses were STILL deductible; the IRS issued a ruling contradicting that. The discrepancy needs resolution - and only Congress can do that.

HumanKind... Be Both

sjrcpa

Level 15

As of now, expenses not deductible if paid with forgiven PPP loan.

Perhaps not deductible in 2020 even though forgiveness may not happen until 2021.

https://www.taxnotes.com/featured-news/ppp-borrowers-brace-potentially-problematic-irs-guidance/2020/11/10/2d5zd

As Anna said, we need to wait and see.

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

G

garman22

Intuit Community Champion

I concur with @sjrcpa @abctax55 @qbteachmt

This could definitely be a cluster once tax season begins if congress/IRS dont hash this out with some sort of guidance. I think extensions may be wise. I hadnt thought that far ahead but I like the idea.

IRonMaN

Level 15

The way Washington works these days, I'm going to guess that they will pass legislation to make the expenses deductible on 4/16/21. You can't fix stupid, but evidently you can vote for stupid to send them to Washington.

Slava Ukraini!

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