Do I report yet to be forgiven PPP in other liabilities

[IRonMaN]

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

[dascpa]

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]

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.

[dascpa]

Not sure why anyone would wait 3 years.  The IRS made that statement based on the assumption of people applying in 2020 but not forgiven until 2021 and applying in early 2021 and expected to be forgiven quickly. I think we all understand reasonableness. I would not assume anything for a client not filing for 3 years.

[qbteachmt]

Well, it's SBA, not IRS, and I stand corrected: "Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination."

https://www.schwabe.com/newsroom-publications-why-you-may-want-to-wait-to-file-for-ppp-loan-forgiven...

I just wanted to make sure everyone is having fun into the future 🙂