Fun with PPP
Updated: Jun 17
The Payroll Protection Program has been a hot topic amongst small businesses over the past month. Our team has fielded many questions regarding these loans, their forgiveness, and how to account for them properly. The true answer is that the narrative and procedures have changed quite a bit over the past few weeks, and have caused quite an uproar amongst professional agencies (AICPA, NAEA, etc) and the federal agencies (IRS, SBA, etc). We did receive some guidance from the IRS when they on April 30, 2020, issued Notice 2020-32 to address the deductibility of loan amounts received under the Paycheck Protection Program (PPP) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). In summary, the IRS stated no tax deduction will be allowed for expenses paid with PPP loan proceeds to the extent such amounts are forgiven under the terms of the CARES Act. This has some major impact on the way these loans should be accounted for, what they should be spent on, and how all of it will affect taxpayers regardless of their business entity and size. We suggest consulting your tax professional if you received or are applying for one of these loans to obtain the proper tax guidance (as it stands today, since it may change before this newsletter goes out). If you would like to schedule a phone/Zoom appointment to discuss the PPP loans, and how they can potentially affect your businesses, please contact us.