Taxability of PPP Loan Forgiveness
As we move our way through these uncertain times, we want to make sure we are keeping you up to date on the latest information. On April 30, 2020, the IRS issued Notice 2020-32 to discuss the taxability of loan forgiveness under the Paycheck Protection Program (PPP). The IRS clarified that the loan forgiveness will not be taxable income and the expenses used towards PPP loan relief will not be tax deductible. The IRS has historically taken this position as it would provide a double tax benefit otherwise.
Below is a link to the Notice 2020-32:
Please be prepared for states to follow the federal treatment on deductibility of expenses used against non-taxable income. Tax planning and communication on expected loan forgiveness for 2020 will be of the utmost importance as 1st and 2nd quarter estimates are due within the next 75 days.
If you have any additional questions, please do not hesitate to contact us.