Axtell Haller & Slachta COVID-19 Update: May 1, 2020
To our clients and friends.
We had indicated in our last e-mail discussing the SBA PPP loan forgiveness guidance there was uncertainty as to the deductibility of expenses if those same expenses were included in the forgiveness computations.
Unfortunately, the IRS released Notice 2020-32 on April 30th which just answered that question. The CARES Act specifically exempts from taxation any loan forgiveness income from the SBA PPP loan program. However, to eliminate a “double dip” (i.e. excluding the income and deducting the expenses paid from tax-exempt income) this notice disallows the deductibility of any expenses paid from the PPP Loan which resulted in loan forgiveness.
There is always a chance that Congress could pass legislation that would change this IRS notice but do not count on it. Accordingly, take this into consideration as you look at what your prospective tax liabilities for 2020 will be.
Amy, Linda, Rod, and the AHS team: Angela, Bethe, Bob, Jonel, Juli, Katie, Mary, Eric, Eileen, Phil, Rick, Spencer, Tracey, Chantel, Angie, Bobbi, Janet, John, Dave & Dan