Main Street Practitioner Blog

Treasury, IRS Release Guidance Implementing PPP Deductibility

  

Jessica L. Jeane, J.D.
Director of Public Policy & Strategic Communications
January 6, 2021

Treasury and the IRS released guidance on January 6 implementing the recent legislative change allowing for the deductibility of expenses paid with a Paycheck Protection Program (PPP) loan. The guidance, Rev. Rule. 2021-2, comes in response to the enactment of section 276(a) of the COVID-Related Tax Relief Act of 2020 under the Consolidated Appropriations Act, 2021 (P.L. 116-230), which codifies “that no deduction is denied, no tax attribute is reduced, and no basis increase is denied by reason of the exclusion from gross income of the forgiveness of an eligible recipient’s covered [PPP] loan.”

Most notably, the new PPP guidance makes obsolete prior Notice 2020-32, 2020-21 I.R.B. 837 (May 18, 2020), and Rev. Rul. 2020-27, 2020-50 I.R.B. 1552 (Dec. 7, 2020).

“As a result of the amendment made by § 276(a) of the Act regarding the Federal income tax consequences of covered loan forgiveness, the conclusion stated in Notice 2020-32, and the holding stated in Rev. Rul. 2020-27, are no longer accurate statements of the law,” Rev. Rule. 2021-2 states. “Accordingly, Notice 2020-32 and Rev. Rul. 2020-27 are declared obsolete as of the effective date of the amendment made by § 276(a) of the Act.”

This change is effective for taxable years ending after March 27, 2020.

###
    The core mission of NSA is to help tax and accounting professionals become more successful.

NSA presents this information in the interest of its members for information purposes only and is not intended to provide, nor should it be relied upon, as legal, tax, or accounting advice.

0 comments
88 views