As Predicted here:
Preparers May Fight IRS On PPP Deduction Denial-Hundreds Of Billions At Stake
Peter J ReillyContributor
I focus on the tax issues of individuals, businesses & more
One of the most exciting features of the Paycheck Protection Program was that it appeared that borrowers were going to be getting deductions for expenses funded with loans that did not have to be paid back. And there was an explicit statement that the discharge of indebtedness would not be taxable income.
Taxability.—For purposes of the Internal Revenue Code of 1986, any amount which (but for this subsection) would be includible in gross income of the eligible recipient by reason of forgiveness described in subsection (b) shall be excluded from gross income.
I saw the merit of the argument, but did not agree. More importantly to me, Lucien Gauthier of the Boston Tax Institute did not agree. Regardless it was disturbing.
The Other Shoe Drops
April 30 was one of the most exciting days in my blogging career. My partner and I were touring the country in our RV. Our carefully laid plans were disrupted by Covid-19. We ended up spending a month sheltering in place at
That very day after nearly a month of friendly relations, a fairly belligerent young woman, who may have been named Karen for all I know, had two very polite officers of the Tuscaloosa PD evict us for trespassing. They were kind of apologetic and suggested we try the Walmart WMT -0.9% parking lot.
As we were driving home that evening just before the coverage lapsed, I saw Notice 2020-32 on my phone and decided that after supper I had to drive back to Walmart to knock out IRS Rains On The Paycheck Protection, which turned out to be one of my all-time biggest hits. The essence of the notice was:
Specifically, this notice clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)