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Additional Guidance on Paycheck Protection Program

May

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Additional Guidance on Paycheck Protection Program

Yesterday the IRS issued its guidance (N-2020-32) regarding the deductibility for Federal income tax purposes of certain otherwise deductible expenses incurred by a business when the taxpayer received a covered loan pursuant to the Paycheck Protection Program. Specifically, this notice clarifies that no deduction is allowed for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to the CARES Act and the income associated with the forgiveness is excluded from gross income for purposes. While we don’t believe that this reflects the intent of Congress, these expenses will not be deductible absent a change of law enacted by Congress.

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