PPP Loan Update
If you are seeking forgiveness for a PPP loan, new rules issued late in 2020 by the IRS prevent business owners from deducting certain expenses from their business income. This means income tax must be paid on PPP loan proceeds that were received.
Initially, the Small Business Administration (SBA) issued guidance indicating that business owners could deduct payroll, rent, and utilities expenses from their business income. This was because the loan’s proceeds were intended to help them afford those expenses. The IRS has since reversed this position for PPP loan debtors who wish to seek forgiveness for their loans.