May 4, 2020: By Christopher M. Leddy, Esq.
IRS Issues New Guidance Regarding Deductibility Of Expenses Which Are Forgiven Under The Payroll Protection Program
On April 30, 2020, the IRS published Notice 2020-32 (the “Notice”) regarding the deductibility of expenses, which would otherwise be properly deductible, if the payment of such expenses results in forgiveness of a Payroll Protection Program (“PPP”) loan. Specifically, the Notice states that “…no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to Section 1106(b) of the [CARES Act] and the income associated with the forgiveness is excluded from gross income for purposes of the Code pursuant to Section 1106(i) of the CARES Act.” What does this mean to recipients of a PPP loan?