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Yesterday, the IRS released Notice
2020-32 which provides guidance on the deductibility of expenses
paid with Paycheck Protection Program (PPP) loan proceeds that are partially
or completely forgiven and excluded from a taxpayer's income.
In this notice, the IRS clarifies that no deduction is allowed
under the Internal Revenue Code (Code) for an expense that is otherwise
deductible if the payment of the expense results in forgiveness of a
covered loan pursuant to the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act), and the income associated with the
forgiveness is excluded from gross income for purposes of the Code pursuant
to the CARES Act.
The IRS indicated that expenses that result
in forgiveness of a PPP loan are not tax deductible in order to prevent a
"double tax benefit."
For a
copy of the Notice 2020-23, please click on the link below:
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