Paycheck Protection Program - Loan Forgiveness
Cancellation of Debt - Excluded from Gross Income
Paycheck Protection Program (PPP) loans have been a popular option for businesses struggling due to COVID-19, but understanding the tax complexities associated with them can be challenging.
The CARES Act specifically exempts PPP loans that have been forgiven from gross income. Therefore, the forgiven amount will NOT be added to taxable income.
On December 21, 2020, Congress passed a stimulus bill which clarifies that expenses paid with PPP funds such as payroll, rent and utilities will be allowed as a deductible business expense. Therefore, businesses are now receiving a double tax benefit.
