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We’ve now received more Guidance on PPP Expense Disallowance

As a quick follow up to yesterday’s article, we’re here to let you know that the Treasury and IRS have officially announced that expenses paid with PPP loans should NOT be deducted regardless of when the loan is forgiven, as long as forgiveness is expected.

Revenue Ruling 2020-27 and Revenue Procedure 2020-51 layout all of the details, but the bottom line is, if you got a PPP loan, and you expect that it will be forgiven, the expenses paid with the loan proceeds are not deductible. As a result, there is officially no reason (that we can think of) to wait to apply for forgiveness (if you’re planning to).

Still unclear is what Congress’ motivation is to change the law to allow for the deductibility of the expenses paid with PPP funds. Currently, we’re locked in via this guidance, along with IRS Notice 2020-32.

Have questions?  Let us know! Feel free to contact Mark Heath, Partner & Director of Tax Services here at McKonly & Asbury at mheath@macpas.com.

Questions on submitting your PPP loan application or the forgiveness process?

Our team stands ready to assist you through the PPP loan application and forgiveness process. Do not go at it alone. Ensure you are submitting the right information and receiving the highest forgiveness amount possible. Visit our PPP Loan Consulting webpage by clicking here to request assistance or support.

About the Author

Mark Heath

Mark is a Partner with McKonly & Asbury. Serving as Director of Tax Services, he brings a wealth of experience in federal, state, and international income as well as franchise tax issues for both publicly and privately held corporatio… Read more

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