Cisco & Co CPA

  • HOME
  • SERVICES
    • ACCOUNTING
    • PERSONAL FINANCIAL PLANNING
    • BUSINESS FINANCIAL PLANNING
    • CHIROPRACTIC ACCOUNTING
  • WHY US
    • STAFF
  • FINANCIAL RESOURCES
    • DOWNLOADABLE FORMS
  • CONTACT US
CONTACT US

PPP Loan Expenses Are Now Tax Deductible

PPP Loan Expense tax deduction paperwork.
Tuesday, 19 January 2021 / Published in Business, Tax Tips & Information

PPP Loan Expenses Are Now Tax Deductible

If you or your business received funds from the Paycheck Protection Program (PPP), the recently passed Emergency Coronavirus Relief Act of 2020 will help to dramatically cut your tax bill. Here’s what you need to know.

Background

The PPP program was created by the CARES Act in March 2020 to help businesses which were adversely affected by the COVID-19 pandemic. Qualified businesses could apply for and receive loans of up to $10 million. Loan proceeds could be used to pay for certain expenses incurred by a business, including salaries and wages, other employee benefits, rent and utilities.

If the business used at least 60% of loan proceeds towards payroll expenses, the entire amount of the loan would be forgiven.

The Dilemma

While the CARES Act spelled out that a business’s forgiven PPP loan would not be considered taxable income, the legislation was silent about how to treat expenses paid for using PPP loan proceeds if the loan was ultimately forgiven.

Congress intended for these expenses to be deductible for federal tax purposes. But since the legislation was silent on this issue, the IRS swooped in and deemed these expenses to be nondeductible.

There was considerable debate over the latter half of 2020, with Congressional politicians explaining that their intent was that the expenses be deductible and the IRS responding “Too bad, they’re nondeductible.”

The Solution

Congress overruled the IRS’s position in the Emergency Coronavirus Relief Act of 2020. The legislation officially makes deductible for federal tax purposes all expenses paid for using proceeds from a forgiven PPP loan.

Stay tuned for updates as to how this new legislation affects your business.

What you can read next

final notice bill
Tips on Monitoring Your Accounts Receivable
piggy bank with graduation cap next to books, calculator and a magnifying glass
Education: Tax Changes You Need to Know
Man handing out cash
New Overtime Rule May Mean More of Your Employees Qualify For Overtime Pay

Recent Posts

  • A thumb print.

    Your Identity is NOT Your Own! How companies use it and what you can do to protect it.

    One of the most valuable things you own is YOU....
  • Tax forms, eyeglasses, and calculator

    Protect Your Tax Return With This Secret Weapon!

    The Problem You hang up the phone with a huge s...
  • A 1099 tax form.

    Make Preparations for Form 1099s This Year

    Here are three tasks to consider that will make...
  • A person utilizing one of the seven tips for financial wellness, budgeting.

    Seven Tips For Financial Wellness In 2021

    Common New Year’s resolutions are to lose weigh...
  • What you need to know about the second round of stimulus payments.

    More Stimulus Payments Are Here

    If you haven’t already, you will see another st...

Categories

  • Announcements
  • Business
  • Financial Planning
  • Personal
  • Retirement Plans
  • Tax Tips & Information
  • Wealth Management

Schedule your 1-to-1 financial planning consultation today!

Visit our Office

Get Directions

Speak with a Staff Member

419.629.3494

Contact Us

Send A Message
Cisco & Co CPA

Mark J. Cisco & Co, Ltd.

419.629.3494

419.629.2444

Hours:

  • Monday: 8:30AM - 4:00PM
  • Tuesday: 8:30AM - 4:00PM
  • Wednesday: 8:30AM - 4:00PM
  • Thursday: 8:30AM - 4:00PM
  • Friday: Appointment Only
  • Saturday: CLOSED
  • Sunday: CLOSED

5030 State Route 66
New Bremen, OH 45869

PO Box 114
New Bremen, OH 45869

  • HOME
  • SERVICES
  • WHY US
  • FINANCIAL RESOURCES
  • CONTACT US

PAYROLL PORTAL

SIGN IN

FOLLOW US!

Copyright © 2021 Mark J. Cisco & Co, Ltd.   |  Website design by Marketing Essentials, LLC   |   Privacy Policy | Site Map

TOP