PPP Forgiveness Pending

[CAPCPA]

Client has PPP loan,  Bank does not want forms for filing for forgiveness yet.  Client appears to meet all the criteria for forgiveness,  IRS guideline is to exclude expenses that were covered by forgiven loan, but how do you treat if there is no confirmation?  Does client expense and then file an amended return once confirmation is received?  How are others handling?

[TaxGuyBill · Accepted solution]

---

@CAPCPA wrote:

IRS guideline is to exclude expenses that were covered by forgiven loan,

---

That is OLD information.  All expenses are now deductible.  The law that passed in December changed that.

[jennisbsvb]

There's debate on PPP Timing. Originally the IRS said you need to account for it in the year you "reasonably believe" the expenses were used and will be forgiven. Now the conversation is turned to "you can't account for it until it's officially cancelled/forgiven by the bank". Like most of us, I know my clients and I know they utilized it 100% correctly and will be forgiven. Waiting until 2021 will cause a host of problems. I believe we will see it done both ways. 

[garman22]

Expenses are deducted in year paid. I think the debate is how to handle forgiveness and timing. I've considered using case law as a reason to include as tax exempt income in year received. Take a look at Novoselsky V Commissioner TC Memo. 2020-68.