Stimulus Bill Ppp Expense Deduction

New stimulus bill brings ppp aid tax relief to small business.

Stimulus bill ppp expense deduction. The bill reverses the irs position by providing that effective for all tax years ending after march 27 2020 otherwise deductible expenses paid with the proceeds of a forgiven ppp loan may be deducted for federal tax purposes and that a borrower s tax basis and other attributes will not be reduced as a result of the exclusion of forgiven ppp loan amounts from gross income. The expense must be for food and. Tax deductibility for ppp expenses.

Repeals the requirement that ppp borrowers deduct the amount of any eidl advance from their ppp forgiveness amount. The good news for most ppp borrowers is that the proposed bill allows for the deduction of these expenses and for loan forgiveness to not be included in income. On sunday december 27 2020 president trump signed the consolidated appropriations act 2021 into law.

The irs said no to tax deductions with ppp money but congress reversed the irs. This is a temporary deduction increase starting for expenses in 2021 and expiring in 2022. In an important move for pandemic hit businesses that took or plan to take a paycheck protection program ppp loan the 900 billion stimulus bill set to pass this week allows companies to deduct business expenses paid for with ppp funds even if the funds are forgiven.

Includes set asides to support first and second time ppp borrowers with 10 or fewer employees first time ppp borrowers that have recently been made eligible and for loans made by community lenders. The package provides government funding as well as a new round of coronavirus stimulus provisions.