On April 30th, the IRS released Notice 2020-32, which provides guidance on the deductibility of expenses paid with Paycheck Protection Program (PPP) loan proceeds that are partially or completely forgiven and excluded from a taxpayer’s income.
In this notice, the IRS clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and the income associated with the forgiveness is excluded from gross income for purposes of the Code pursuant to the CARES Act.
The IRS indicated that expenses that result in forgiveness of a PPP loan are not tax-deductible in order to prevent a “double tax benefit.”
For a copy of the Notice 2020-23, please click on the link below:
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