On Thursday April 30, 2020, the IRS released Notice 2020-32, clarifying that no tax deduction is allowed for the payment of expenses resulting in loan forgiveness under the SBA Paycheck Protection Loan Program.
The rationale of the IRS for the denial of such deductions is based on Section 265 of the Internal Revenue Code which disallows a deduction for amounts that are otherwise deductible if the amounts are allocable to one or more classes of tax-exempt income.
Although the IRS has taken the position that costs incurred under the Paycheck Protection Loan Program are not deductible, Congress could reverse the IRS’s denial of such deductions. Certain Members of Congress have publicly stated that denying deductions for expenses resulting in loan forgiveness is contrary to Congress’s intent in establishing the Paycheck Protection Loan Program.
Please contact a Kerr Russell attorney today for more information about the Paycheck Protection Loan Program.
John D. Gatti is a Certified Public Accountant as well as an attorney. He concentrates his practice in the areas of taxation, mergers and acquisitions, business law, real estate law, and estate planning. John also serves as the firm’s administrative partner and chairs the firm’s Taxation Practice Group. He has considerable experience representing professional services firms. These include accounting, engineering, and architectural firms, as well as insurance agencies, in purchase and sale transactions.
Cody Attisha focuses on taxation law, corporate law, mergers and acquisitions, finance, and estate and trust planning. He also helps clients with entity formation, including evaluating, choosing, and implementing the right partnership, corporate, or non-profit structure.
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