PPP Loans and Taxes
The CARES Act provided that PPP loan funds that are forgiven will not be included in gross income for tax purposes (contrary to the general tax rule that forgiveness of indebtedness is included in a taxpayer’s gross income). The $900 Billion COVID-19 Relief Bill that became law in late December clarified certain aspects of the PPP program under the CARES Act. To the great benefit (and relief) of recipients of PPP funds, PPP funds that are forgiven and used to pay employees, rent, utilities and other specified-business costs can now be expensed (reversing the IRS position on this matter); however, it is unclear whether the states will follow for state taxes.
