The IRS has added a new wrinkle to the Small Business Administration's Paycheck Protection Program. The new guidance, issued Nov. 18, has specifically prohibited any small business that has a reasonable expectation of PPP loan forgiveness from deducting those expenses in its 2020 taxes. Even if it takes until 2021 or 2022 to reach actual forgiveness, or if the business has yet to even fill out a forgiveness application.
With this new rule, we will be including any PPP funds as taxable income on your 2020 tax returns, unless congress acts fast to change it.
Sorry to be the bearer of bad news!