Categories: U.S. Treasury

Treasury and IRS Issue Guidance Clarifying the Deductibility of Expenses Where a Business Received a PPP Loan

WASHINGTON – The U.S. Treasury Department and Internal Revenue Service (IRS) released guidance today clarifying the tax treatment of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year the loan was received. 

Since businesses are not taxed on the proceeds of a forgiven PPP loan, the expenses are not deductible. This results in neither a tax benefit nor tax harm since the taxpayer has not paid anything out of pocket.

If a business reasonably believes that a PPP loan will be forgiven in the future, expenses related to the loan are not deductible, whether the business has filed for forgiveness or not.  Therefore, we encourage businesses to file for forgiveness as soon as possible.

In the case where a PPP loan was expected to be forgiven, and it is not, businesses will be able to deduct those expenses. 

“Today’s guidance provides taxpayers with greater clarity and flexibility,” said Secretary Steven T. Mnuchin.  “These provisions ensure that all small businesses receiving PPP loans are treated fairly, and we continue to encourage borrowers to file for loan forgiveness as quickly as possible.”

Click here to view the revenue ruling.

Click here to view the revenue procedure.

####

IR Press

Share
Published by
IR Press

Recent Posts

Treasury Sanctions Gazprombank and Takes Additional Steps to Curtail Russia’s Use of the International Financial System

Treasury imposes sanctions on dozens of Russian banks, securities registrars, and finance officials; OFAC issues…

14 hours ago

Acting Comptroller Testifies on State of the Federal Banking System

WASHINGTON—Acting Comptroller Michael J. Hsu today testified on the state of the federal banking system…

23 hours ago

Remarks by Assistant Secretary for International Finance Brent Neiman on the U.S. Cross-Border Payments Agenda

As Prepared for Delivery Thank you very much for the opportunity to be here today, and…

3 days ago

Remarks by Assistant Secretary for Investment Security Paul Rosen at the Third Annual CFIUS Conference

As Prepared for Delivery Good afternoon.  I’d like to start by thanking our panelists today for…

3 days ago

U.S. Department of the Treasury Releases Final Rules to Expand Access to Clean Energy Tax Credits

Final rules will improve access to direct pay for co-owned clean energy projects, helping to…

3 days ago