PPP Loan Forgiveness Expenses Not Deductible – How This May Impact Your Taxes August 27, 2020REMINDER:The IRS issued guidelines around Notice 2020-32 which clarify those expenses incurred which relate to the loan forgiveness under the Paycheck Protection Plan (PPP) are not deductible expenses. This matter was not specifically addressed when the CARES Act was released. As a result, the IRS issued the notice to make it clear its position since the loan forgiveness is not taxable income the related expenses should not be deductible. This new notice reinforces Section 265 of the IRS code which prevents double tax benefits.HOW THIS MAY IMPACT YOUR TAXES:The tax bill fall-out could be substantial for some businesses. There are law makers on both sides of the isle who disagree with the IRS and feel tax ramifications conflict with the legislative intent of the stimulus. Additionally, some practitioners feel the IRS is incorrect and may choose to challenge the IRS on this issue. Since this is an election year, KatzAbosch is anticipating clarification on this to be very slow.Nevertheless taking the PPP loan and being able to survive the pandemic still comes out as a net positive for many businesses. Once a loan is received from the PPP program, businesses need to be strategic about how to bring employees back, how to spend the funds, and how to ensure you receive the maximum amount of loan forgiveness.KatzAbosch will continue to monitor the tax implication situation. In the meantime, if you have questions or concerns on how any of the new provisions or available funding may impact your situation, please contact your KatzAbosch representative, or contact us by clicking here. KatzAbosch is here to help guide you through the Paycheck Protection Program.About KatzAbosch: Founded in 1969, KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. As an accounting firm, our mission is to provide the highest quality accounting, tax, financial and management consulting services to our regional clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. KatzAbosch is consistently named a Best Accounting Firm to Work For in Accounting Today and has been named a Top 200 Accounting Firms in the Nation by Inside Public Accounting. Our firm is also ranked among the Top 15 Largest Accounting Firms in the Baltimore Area by the Baltimore Business Journal and a Top Workplace four times by The Baltimore Sun.