PPP Forgiven Funds are NOT Deductible

[Greg O'Brien]

IRS released guidance yesterday saying that any PPP expenses that are forgiven are NOT deductible for Fed income tax purposes.  In essence, the forgiven funds are taxable, in direct conflict with the Cares Act.  Congress addressed forgiven income in the Cares Act but not deductibility.

Many tax pros have been wary of this for weeks and the IRS dropped the hammer yesterday.

However, already saw Sen Grassley saying that this was not the intent and he was disappointed with the IRS.  I suspect we haven't heard the last word but for tax planning purposes, people should be aware of the implications laid out.