Sign Up For Novogradac Industry Alert Emails

IRS Notice Clarifies that Taxpayers Who Receive PPP Forgivable Loans are Ineligible to Deduct Expenses Covered by Loan

Monday, May 4, 2020 - 2:45PM

The Internal Revenue Service issued a notice that clarifies that taxpayers are not allowed a deduction for an expense if payment of the expense results in forgiveness of a Paycheck Protection Program (PPP) loan, and the income associated with the forgiveness is excluded from gross income. IRS Notice 2020-32 concludes that a provision of the Coronavirus Aid, Relief and Economic Security (CARES) Act that excludes from gross income any category of income that may arise from PPP loan forgiveness means the IRS should disallow any otherwise allowable deduction for expenses that result in loan forgiveness. The IRS concludes that this treatment prevents a double tax benefit.

For community development, affordable housing and renewable energy updates related to COVID-19, see Novogradac’s dedicated page.

Learn more about Novogradac's expertise and many services