Rev. Proc. 2021-20: Safer harbor, expense deductions having taxpayers one to obtained first-round PPP funds
New Irs now released a progress kind of Rev. Proc. 2021-20 that provides a safe harbor for sure taxpayers you to definitely obtained first-bullet Income Defense Program (PPP) money however, don’t deduct the fresh eligible costs as they relied on earlier Irs recommendations that disallowed such as write-offs and that are awarded ahead of legislative change passed into the .
The fresh new safer harbor doesn’t need this new processing away from a revised go back, but can end up being invoked through a keen election and you can tying good declaration to your federal income tax return for the taxation 12 months following the taxpayer’s 2020 tax year.
Record
Brand new PPP-a course getting resource financing to own small and large enterprises that is applied from the Small company Management (SBA)-are to start with launched from the specifications within the Coronavirus Support, Recovery, and you can Financial Security Act (CARES Operate) (Club. L. Zero. 116-136). The latest CARES Operate provided for the forgiveness regarding secured funds and one people matter that otherwise would-be includible in the an eligible recipient’s gross income from the cause of such forgiveness are excluded off gross income for government taxation aim.
The newest Irs during the 2020 approved recommendations (earliest Notice 2020-thirty-two after which Rev. Rul. 2020-27) saying one users out-of PPP finance just weren’t in order to subtract if you don’t deductible expenses for the the total amount that the percentage of one’s expenditures resulted (otherwise is expected to effects) throughout the forgiveness away from a PPP-guaranteed financing.
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