On May 27, 2020, Norman Lencz was quoted in Accounting Today about the possibility of deducting expenses funded by forgiven Payment Protection Program (PPP) loans.
According to the article, those who received aid have now focused their attention on the forgiveness aspect of the loans received, and the tax impacts of having those loans forgiven. On April 30, the IRS released Notice 2020-32, announcing that no tax deductions will be allowed for expenses that are funded by PPP loans that are later forgiven.
“Many members of Congress, including Senate Finance Committee Chair Chuck Grassley, have stated that the IRS’s position in Notice 2020-32 is contrary to the legislative intent of the PPP. In addition, a number of professional organizations, such as the AICPA, have issued statements requesting that Notice 2020-32 be rescinded or overruled by legislative action,” said Lencz.
“Furthermore, many practitioners have argued that the notice is inconsistent with the Internal Revenue Code and the CARES Act.” As a result, he predicted, “The position set forth in Notice 2020-32 may be reversed by legislative action, further IRS guidance, or a court ruling.”
Click here to access the article.