Get all the latest news on coronavirus and more delivered daily to your inbox. Sign up here.
Continue Reading Below
The tax agency released guidance clarifying that otherwise deductible business expenses, like salaries, will not be deductible if they were paid for by a forgiven PPP loan – thereby preventing a “double tax benefit.”
The forgiven loans won’t be taxed, and the ruling is based on the premise that deductions typically aren’t allowed on exempt income.
PPP loans are largely expected to be allocated toward payroll expenses (75 percent), but the remaining 25 percent can be put toward rent, mortgage interest, utilities and interest on other debt obligations.
Recipients are eligible for complete forgiveness if they keep staffing numbers – and salaries – consistent, if loan allocation specifications are met and if the funds are used within an eight week window. Forgiveness is prorated if not all conditions are fully met.