On April 30, the IRS ruled out tax deductions for wages and rent paid with forgivable PPP loans. The IRS views it as a double dip. However, some Senators and Congressmen are pushing back, saying that expenses funded with small business loans should be tax deductible after all, disagreeing with the IRS.
The stakes clearly matter to businesses who have scooped up Paycheck Protection Program loans of up to $10M to keep their employees on the payroll during the shutdown.
The Paycheck Protection Program allows loans of up to $10 million at 1% interest to employers with fewer than 500 workers to cover two months of payroll and overhead. If you keep your workers and do not cut their wages, the government will forgive most or all of the loan and even repay the bank that actually made you the loan. The loan amounts will be forgiven as long as:
(1) The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and
(2) Employee and compensation levels are maintained. Payroll costs are capped at $100,000 for each employee.
For more information regarding PPP and tax deductions from the IRS please click here.
For more information visit: forbes.comForbes taxes
by robert w. woods
may 2, 2020