IRS clarifies rules for PPP deductions

November 19, 2020

The IRS on Wednesday, Nov. 18, released new guidance that clarifies the rules for deducting expenses paid with Paycheck Protection Program (PPP) funds.

Rev. Ruling 2020-27 states that even if a borrower has a reasonable expectation of reimbursement, the deduction of expenses paid with PPP funds is inappropriate. In short, borrowers can’t deduct expenses paid for with PPP funds if they reasonably think they’ll receive loan forgiveness.

Rev. Proc. 2020-51 provides a safe harbor allowing certain PPP loan participants to claim a deduction in 2020.

Like most PPP guidance, new clarification leads to more questions. Learn more.

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