IRS Acknowledges Congressional Reversal on Deducting Eligible PPP Expenses

January 6, 2021

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In a previous alert we reported that the Consolidated Appropriations Act, 2021, which contains The COVID-related Tax Relief Act of 2020, specifically provides that “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income” of a PPP loan. Today, the Internal Revenue Service issued Revenue Ruling 2021-2, which reflects this change in the law. Revenue Ruling 2021-2 obsoletes IRS Notice 2020-32 and Revenue Ruling 2020-27, which disallowed deductions for the payment of eligible expenses when the payments resulted (or could be expected to result) in forgiveness of a covered loan.

As always, if you have questions regarding this or other tax matters, please contact one of the authors or any member of McGlinchey’s Tax team.

Insights

Alert

IRS Provides Safe Harbor to Deduct Certain 2020 PPP Related Expenses in 2021

April 23, 2021

The IRS has announced a safe harbor in Revenue Procedure 2021-20 that will permit certain taxpayers an election to deduct in 2021 expenses paid with proceeds of a forgiven PPP that were not claimed as a deduction on their tax return or information return filed in 2020.

COVID-19 Updates

Shuttered Venue Operators Grant Program

April 9, 2021

In the next few days, the Small Business Administration (SBA) will open the application process for the Shuttered Venue Operators Grant (SVOG). Eligible applicants may qualify for grants equal to 45% of their gross earned revenue, with the maximum amount available for a single grant award of $10 million.

Event

Webinar: Updates to the Paycheck Protection Program & Other Issues

March 18, 2021

Join us on Thursday, March 18 for the second installment in our 3-Part webinar series on the Paycheck Protection Program and formulate your game-plan before you apply for forgiveness.

Event

Webinar: What to know about PPP loan forgiveness

February 18, 2021

You certified your eligibility for the PPP loan, calculated the amount of your loan, and submitted your application. You used the loan proceeds for allowable purposes. Now, the time has come to calculate the amount to claim in your Loan Forgiveness Application. But is there a “right” way to do it?

Alert

Pitfalls of PPP Loan Forgiveness

January 25, 2021

Businesses are now eligible to apply for forgiveness of loans received through the federal Paycheck Protection Program (PPP) established under the CARES Act. PPP loan recipients should be thoughtful in responding to information requested by lenders and the Small Business Administration.

Alert

Yes, I Can Deduct Expenses Paid with a Forgiven PPP Loan

December 31, 2020

Congress Reverses IRS Congress has overridden the IRS position that expenses paid with PPP loan proceeds cannot be deducted if the PPP loan is forgiven. In our November 20, 2020, alert captioned “Can I Deduct Expenses Paid with a PPP Loan?” we addressed Revenue Ruling 2020-27 in which the IRS expanded on its original positionMore

Alert

IRS Announces Form 1099-C Not Required for PPP Loan Forgiveness

September 22, 2020

IRS Announcement 2020-12 notifies lenders that they should not file IRS Form 1099-C with the IRS or furnish it to borrowers to report the amount of qualifying forgiveness with respect to covered loans made under the Paycheck Protection Program (PPP).