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IRS Provides Expenses Paid with Forgiven PPP Funds Are Not Deductible

Monday, May 4, 2020
IRS Provides Expenses Paid with Forgiven PPP Funds Are Not Deductible
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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:

 https://www.irs.gov/pub/irs-drop/n-20-32.pdf

If you have any comments or questions regarding any of the above information, please do not hesitate to call Larry Grudizen at (708) 717-9638 or e-mail him at larry@larrygrudzien.com.

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.

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