Home » Update | Deductibility of expenses funded with Paycheck Protection Program loans

Update | Deductibility of expenses funded with Paycheck Protection Program loans

By Thomas E. Rutledge
Stoll Keenon Ogden, PLLC

In an April 30 article reviewing the mechanism by which a Paycheck Protection Program loan may be forgiven, a pair of open tax questions with respect to PPP loans were reviewed. One of them dealt with the question of whether expenses funded with a forgiven PPP loan may be deducted from a borrower’s taxes.

Well, the ink was barely dry on that before the IRS addressed the question. In a notice published April 30, the IRS announced (IRS announcement was 2020–32) that expenses that are funded with a forgiven PPP loan may not be deducted from the borrower’s income. In effect, while for example compensation payments may be paid for with a PPP loan, and the borrower does not recognize income in the amount of those loan proceeds, the borrower may not also take a deduction in that same amount.

Such is the rate of change with PPP loans.


Thomas E. Rutledge is a member at Stoll Keenon Ogden, PLLC and can be reached at [email protected]