5.1.20 | Client Alert – COVID-19 Update
Last night, the IRS issued Notice 2020-32 which announced its position on the deductibility of business expenses paid with the proceeds of forgiven Paycheck Protection Program (“PPP”) loans. The Notice denies a deduction for any expenses paid from PPP loan proceeds that are ultimately forgiven. The denial of deductibility is in response to the fact that the PPP statute provides that the forgiven amounts do not constitute taxable income.
As this Notice represents the IRS’s current position on the matter, taxpayers should give it appropriate weight when considering whether to deduct these expenses from 2020 taxable income in their planning and ultimate filing of 2020 income tax returns. We will be monitoring this topic and will provide an update if and when the IRS releases any additional guidance.
For more information on this topic or any other matter related to the COVID-19 pandemic, please contact your Berdon advisor and visit Berdon’s COVID-19 Information Center.