PPP Loan Forgiveness Statement

[misskeiko]

In section 4.1 PPP Loan Forgivenss Statement, why are there both 2020 taxable year and 2021 taxable year? What does the year 2020 and 2021 mean there? Thank you.

[abctax55]

Ummm... loans were forgiven in both years.  

Pick the one that applies to your client.

[misskeiko]

I don't think it means forgiven year.

If the loan is forgiven in 2020, it should be treated as tax-exempt income in 2020 tax return, not 2021.

We can treat PPP as tax-exempt income:

1=as expenses are paid or incurred

2=when forgiveness is applied for

3=when forgiveness is granted

[Couls Law]

I asked this same question on Tuesday and no one could answer.  It doesn't make any sense to talk about how 2020 was handled on the 2021 return.

[IRonMaN]

"It doesn't make any sense to talk about how 2020 was handled on the 2021 return."

Since when does the IRS have to make sense?  If you remember, first the loans were taxable and then they weren't.  And then there were was, if they know they were going to be forgiven, do we show them as forgiven in 2020?  So, just put the information in as asked.  If the loans were forgiven in 2020, type in 2020.  If they were forgiven in 2021 type in 2021.  There is no need to try and over complicate things.

[misskeiko]

That's similar to what I planned to do. I think what matters is the result, which is PPP is nontaxable for federal.

I put PPP1 in the 2020 section and PPP2 in the 2021 section since I wanted to separate two PPP loans. I treated both of them as tax-exempt income in 2021 based on different rules-PPP1 is as forgiveness was applied in 2021 and PPP2 is as expenses were paid in 2021. So I need two different boxes.

[Couls Law]

"Since when does the IRS have to make sense? "

It's not the IRS I'm questioning here, it's Lacerte.  The F1120S instruction never say to file a 2020 statement on 2021.  It simply says do not file an amended return to attach a statement to 2020 if you claimed the tax-exempt income in 2020.  Yet in Lacerte you have to enter data for 2020 in order to clear the critical diagnostic.  That doesn't make sense.  I have a client that didn't receive any PPP money until 2021.      

[IRonMaN]

You don’t file an amended return because you can just attach it the current year return.  That doesn’t sound overly confusing 

[Couls Law]

 The IRS never says to include a statement for 2020 on 2021.  And what am what am I supposed to do to clear the critical diagnostic for the client that received round 1 in 2021?     

[IRonMaN]

"The IRS never says to include a statement for 2020 on 2021"

Ok, if you say so ----------- although a lot of folks may disagree with that statement.

[Couls Law]

Point to it.

[IRonMaN]

>>>>>>>>> Google

That's all the pointing I am doing.  Personally I don't care what you do with your returns.  If you think the whole thing is a bunch of BS, that isn't my problem ---- it's yours.

[abctax55]

"....Point to it."

REV PROC  2021-48, & 2021-49

I suggest a bit of light reading this weekend.