loan forgiveness payment protection program

Loan Forgiveness under PPP Loan Provisions

Well, you probably saw this coming…

Turns out … if you received a PPP loan, the expenses you pay from the proceeds of this (forgivable) loan … are not deductible.


The IRS just released new guidance to this end (which is being protested by the AICPA and other accounting associations).

This provision reduces the value of the “loan”, depending on your tax rate.

And it’s a good lesson for all of us: Congress can do whatever it likes. And it doesn’t need to tell you in a timely fashion. It can come in at the 11th hour and change everything.

Welcome to my world.

That said, we can do certain things with tax planning (and your cooperation) to reduce the impact of this new IRS guidance.

This is most definitely the season during which there is a clear separation between those who have good advice in their corner … and those who don’t.

There is also something else you need to understand:

The IRS and the SBA have NOT released clear guidance about how to ensure that every part of this PPP loan is forgivable.

Yes, we know the basics that I’ve already covered:

  • Keep/restore at least 75% of pre-February 15, 2020 payroll by June 30, 2020
  • Use all the funds within 8 weeks of PPP disbursement
  • Submit the proper paperwork to your bank

Well, here’s the problem — EXACTLY what kind of proof will be required?

  • What happens if an owner takes a bigger wage to reach that 75%?
  • Will any of us have to PROVE that we were impacted by Covid-19?
  • If so, HOW will we prove it to their satisfaction?

We don’t have good answers to these questions yet, at least from official channels. But we are working on it, and paying attention to ALL OF THIS … so you don’t have to.

We will keep you posted.


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