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The Coronavirus Aid, Relief and Economic Security (CARES) Act




How many of you have applied for this help, through PPP or EIDL funding for yourself or your employees? 


Many of my clients are solopreneurs for whom the health-related events of 2020 had very little impact.


Many, in fact, have actually done as well or better than in past years. 


I do, however, have several other clients whose livelihoods depend on the support of good hard workers.


The American work-force.  A source of pride for our great country for literally centuries.


Some with more of a contract labor support system in place found the Economic Impact Disaster Loan (EIDL) program to be their best option.


Others availed themselves of the Paycheck Protection Program (PPP) loans, and have subsequently applied for and received forgiveness for these loans.


The prospect of “free money” to keep people on payroll felt, to many, like the government actually showing some compassion for The People. 


First, let’s talk about the tax implications. 


Who knew that part of being a tax expert was going to entail getting educated on all of this emergent government largesse?


And people think accounting isn’t interesting, or exciting.


Perish the thought!


The U.S. Department of Treasury has made it pretty clear that if you received PPP funds to assist in payroll and rent expenses that you lose the right to reduce gross income by those expenses.


Their phrasing states, “…If a business reasonably believes that a PPP loan will be forgiven in the future, expenses related to the loan are not deductible, whether the business has filed for forgiveness or not.  Therefore, we encourage businesses to file for forgiveness as soon as possible.”


This creates an accounting puzzle, but one that can be worked out with expert help. 


The main thing to keep in mind is that the IRS will write code with the underlying principle of avoidance of “double-dipping,” or enjoying some sort of benefit twice.


You get tax-free money, you don’t get to write off the expense you used it to pay.  As “not-great” as that is, you have to grudgingly admit it makes a certain amount of sense. 


I want you to get two takeaways from this information:


  1. If you have been dragging your feet on applying for PPP loan forgiveness for your company the time is RIGHT NOW.  At least get started on Monday

  2. We can help with this particular gnarled ball of yarn.  It’s different, but we’re up to the challenge.


If you are in this situation, or for any other tax-related issues, as always, the first call is always free.


Click this link to schedule time with me:


Citation: “Treasury and IRS Issue Guidance Clarifying the Deductibility of Expenses Where a Business Received a PPP Loan,” November 18, 2020, U.S. Department of Treasury, Press Releases

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