PPP Loan Forgiveness – Pending Income Taxes Due?
One of the least discussed aspect of PPP loan forgiveness is the pending income tax bill for its business owners. As originally written, Congress intended PPP loan forgiveness to be a nontaxable event. With Notice 2020-32, the IRS took a different stance and denied tax deductions for expenses paid with PPP loan proceeds. For a PPP loan of $750,000, this could result in a tax bill to the owners of over a quarter of a million dollars! There are still questions as to how and when the tax will be administered (2020 vs 2021), and if relief will be provided for unsuspecting taxpayers. There is hope that Congress will pass legislation to once again make PPP forgiveness a non-taxable event, but it is unlikely to happen until after the election, if at all. For now, it’s important to plan for the cash flow outflow come this April. Please reach out to our office to discuss PPP loan forgiveness and planning services.[/vc_column_text][/vc_column][/vc_row]