Please note that this blog is based on laws effective on December 23, 2020 and may not contain later amendments. Please contact Cray Kaiser for most recent information.
UPDATE 12/23/20: As you are probably aware, yesterday President Trump cast doubt on his willingness to sign the recently passed omnibus bill that includes long-awaited COVID-19 stimulus legislation. We want to assure you that we are aware of the ongoing situation and plan to stay fully alert to any developments, even during the Christmas holiday.
You can have full confidence that we will keep you apprised of any key developments, including whether the President signs the bill or not, if Congress makes any changes to the legislation, and, in the case of a presidential veto, whether Congress is expected to be able to override the veto.
On Monday, December 21, 2020 the House released the details of the $900 billion coronavirus relief package. The bill is expected to pass in short order.
This package includes a number of relief provisions specific to aiding individuals and businesses affected by the pandemic. Of particular interest to us, as tax advisors, was the inclusion of clarifying language as it relates to the deductibility of expenses paid with PPP loans. You may recall from our last update that the IRS believed that these expenses should not be deductible. The bill released today clarifies that these expenses are deductible. As the bill reads today, there is no limit to which taxpayers benefit from this treatment.
What Does This Mean for You?
If you received a PPP loan, and expect to receive loan forgiveness, you can breathe a sigh of relief. The loan proceeds are not taxable and you will not have phantom income tax due to your not being able to deduct expenses paid with PPP loans.
The bill has many other provisions including another round of PPP loans for eligible businesses, stimulus checks for eligible taxpayers, and an extension of certain unemployment benefits and payroll credits. Please stay tuned to our blog for further updates. In the meantime, if you have any questions, contact us at 630-953-4900.