IRS Issues Guidance Regarding the Deductibility of Expenses Paid for with PPP Loan Funds
Business Law Articles
By Robert J. Waine, Esquire
Rothman Gordon
Pittsburgh, Pennsylvania
On November 18, 2020, the IRS issued Revenue Ruling 2020-27 and Revenue Procedure 2020-51, which clarify the deductibility of otherwise deductible expenses where the taxpayer reasonably expects to receive forgiveness of a PPP loan based in part on those expenses. Section 1106(i) of the CARES Act excludes from gross income any amount forgiven from a PPP loan. Revenue Ruling 2020-27 addresses the situation where the borrower pays the expense in 2020, but does not receive forgiveness of the PPP loan until 2021. Revenue Procedure 2020-51 provides a safe harbor for borrowers whose PPP loan is not forgiven, or who choose not to request loan forgiveness.