In my December 1, 2020 post, I cited to IRS Revenue Ruling 2020-27 in which the IRS stated that it would not allow a deduction for business expenses paid with proceeds from a PPP loan which was, or would be, forgiven.

The IRS position was been overruled by Congress. The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 signed on December 27, 2020 specifically provides that business expenses paid/accrued in 2020 can be deducted, even if the expenses were paid with a forgiven PPP loan. This is an important change as you begin preparing for the 2020 tax filing season.

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