Do I report yet to be forgiven PPP in other liabilities

Forum|Forum|5 years ago
January 27, 2021
5 replies
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IRonMaN

Level 15

They are reported somewhere in liabilities until the loans are forgiven.

Slava Ukraini!

dascpa

Level 11

Prior to the Dec 27th Act allowing for non-taxability of PPP, the IRS had stated that if there is "reasonable expectation" the the PPP loan would be forgiven in 2021 then it was okay to report it as forgiven on the 2020 tax return. Considering that with the new SBA forgiveness form PPP of below $150,000 is now easier than ever to be forgiven I don't think it might be wrong to report it as forgiven in 2020 and not record the liability. Worst case it's a reverse M-1 deduction in 2021 if not forgiven. If preparing financial statements, that's a different story.

qbteachmt

Level 15

It was always considered not taxable income; it's the expense deduction that changed.

"I don't think it might be wrong to report it as forgiven in 2020 and not record the liability."

But they have to apply for forgiveness, and they have 3 years to do so. That's a pretty big assumption on your part for that client.

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