The Paycheck Protection Program (PPP) is available to many U.S. small businesses affected by the novel coronavirus (COVID-19). Businesses can qualify for 100% loan forgiveness for amounts used for payroll costs, mortgage interest, rent and utility payments during the eight weeks after receipt of the loan, as long as no more than 25% of the loan proceeds are used for nonpayroll costs. In Notice 2020-32, the IRS has clarified that deductions for income tax purposes aren’t allowed for expenses that are otherwise deductible if the payment of the expense results in forgiveness of a covered loan. The IRS also stated that the forgiven loan funds aren’t included in a business’s gross income.
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2023 – 02/07 – Answers to your questions about 2023 limits on individual taxes