IRS Publishes Guidance Regarding Tax Treatment of Forgiven Paycheck Protection Program Loans
The IRS has issued Notice 2020-32, explaining the tax treatment of loans forgiven under the Paycheck Protection Program (PPP).
Their position is that forgiveness of the PPP loan creates income exempt from federal income tax, and therefore the expenses incurred that gave rise to that forgiveness are nondeductible as ordinary and necessary business expenses. In other words, business taxpayers will not be able to deduct expenses that were used to obtain forgiveness of the PPP loans.
The entire Notice can be read here.
