Stimulus Bill Update Ppp Expense Deduction

The irs said no to tax deductions with ppp money but congress reversed the irs.

Stimulus bill update ppp expense deduction. Small businesses that took a ppp loan and saw their revenues fall by 25 will be able for a second loan. In an important move for pandemic hit businesses that took or plan to take a paycheck protection program ppp loan the 900 billion stimulus bill set to pass this week allows companies to deduct business expenses paid for with ppp funds even if the funds are forgiven. Congress finally reached agreement and passed on december 21 2020 a 900 billion economic stimulus bill which was signed into law by the president on december 27 2020.

The regulations or guidance will apply retroactively to march 12 2020. Educator expenses for protective equipment. The good news for most ppp borrowers is that the proposed bill allows for the deduction of these expenses and for loan forgiveness to not be included in income.

Covid stimulus package allows taxpayers to deduct expenses paid with ppp funds december 22 2020 by robert venables updated 12 28 20 to reflect the signing of the bill into law on sunday december 27 2020 president trump signed the consolidated appropriations act 2021 into law. Ppp loans are forgivable and despite normal tax rules if the loan is forgiven that will not be income. In april the irs issued notice 2020 32 which stated that no deduction would be allowed under the internal revenue code for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a ppp loan because the income associated with the forgiveness is excluded from gross income for purposes of the code under cares act section 1106 i.

Among other things the bill expands and clarifies the paycheck protection program ppp as amended which was originally passed under the coronavirus aid relief and economic security act cares on march 27 2020.