Those that received a PPP Loan that was needed to continue business operations due to COVID, have an opportunity to get the loan forgiven. If the loan was forgiven, then you cannot deduct qualified expenses (i.e. mostly payroll) that was paid with the PPP proceeds. Adding back qualified expenses to income, increase a business tax liability. These things you know:)
There was a play being kicked around of not applying for the PPP loan forgiveness until later 2021, file 2020 taxes early in 2021 and deduct all PPP loan covered expenses on 2020 taxes, then get forgiveness in 2021 and the forgiveness and expenses are in different years and no add back of PPP qualified expenses to income. Still following?
Well…IRS shot this idea down yesterday afternoon with Revenue Procedure 2020-27. This Rev Proc states that if a taxpayer has reasonable expectation of PPP loan forgiveness in 2021, the taxpayer cannot deduct those PPP qualified expenses on the 2020 tax return.

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