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Archive for Paycheck Protection Program

How To Apply For Payment Protection Program Loan Forgiveness

How To Apply For Payment Protection Program Loan Forgiveness

In last week’s blog, we discussed the continuing confusion surrounding the deductibility of eligible expenses by small businesses who have received loans through the Paycheck Protection Program (PPP). While that situation has yet to be fully resolved, another aspect of the PPP program, applying for loan forgiveness, is a bit clearer cut.

You might ask, “why are you writing about the PPP loan forgiveness in a multistate tax blog?” The answer is simple. One of the things we are proudest of, in our state tax consulting space, is that we too, are a small business. And we’ve had first-hand experience in working through the complexities of this process. We felt it was important enough from a national small business perspective to warrant some dedicated space!

Which Expenses Are Eligible For Loan Forgiveness?

Loans through the PPP are applicable for forgiveness, but to be forgiven, the funds must be used to cover the following:

-Payroll costs, including benefits (up to $15,385 per worker)
-Interest on mortgage obligations, entered into before February 15, 2020
-Rent, under lease agreements in force before February 15, 2020
-Utilities, for which service began before February 15, 2020

In addition, employee and compensation levels must be maintained, or employees must be quickly rehired. Plus, no more than 25 percent of the forgiven amount may be for non-payroll costs.

How To Calculate PPP Loan Forgiveness
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Paycheck Protection Program Loan Forgiveness: The Devil Is In The Details


The devil is in the details, but where exactly? This week we are starting to see how the broad changes in the recent spate of COVID-19 legislation will be administered. We have new notices on loan forgiveness procedures (did you get your PPP loan yet?).

The Finer Points of PPP Loan Forgiveness

Loan forgiveness offers powerful assistance to those small businesses who were actually able to receive Paycheck Protection Program loan funds. However, loan forgiveness is not without its costs. While amounts forgiven will not be included in income under the usual cancellation of indebtedness rules, business owners may not be entitled to their typical business deductions either. Notice 2020-32 clarifies that otherwise allowable deductions are disallowed if the payment of the expense (1) results in loan forgiveness under the PPP loan program and (2) the income associated with the loan forgiveness is excluded from income under CARES Act Section 1106(i).

What are the tax consequences of loan forgiveness under the paycheck protection loan program?
Under normal circumstances, when a loan or debt is forgiven, the income is included in the debtor’s income under cancellation of debt principles. Paycheck protection loans, however, are excluded from these generally applicable rules—meaning that amounts forgiven are not included in the recipient’s income when forgiven.
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Do You Know If You Can Deduct Expenses With A PPP Loan?

Monika Miles: Paycheck Protection Program

It’s been nearly a month and half since the Coronavirus Aid, Relief, and Economic Security Act (CARES) established the Paycheck Protection

Program (PPP). In the time since, countless businesses across the country have applied for aid. Congress has also passed the Paycheck Protection Program and Health Care Enhancement Act, which added an additional $320 billion in funding after the first $349 billion was allocated.

During this time, there have been various criticisms of the program, with many questions coming from small business owners. Many tax experts and economists also have unanswered questions regarding the program. One of the most asked questions is, will small businesses who have received PPP loans be allowed to deduct expenses?

Deductibility For PPP Expenses

While the CARES Act does contain language that specifically excludes loans forgiven under the PPP from being taxable income at the federal level, it also conflicts with other areas of tax code, which initially led to confusion amongst small business owners and tax officials alike.
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