The IRS issued Notice 2020-32 on the evening of April 30, 2020 to clarify the tax deductibility of expenses paid with loan proceeds from the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economy Security Act (CARES Act). Businesses cannot claim a deduction for expenses that may typically be deductible (such as wages and rent), to the extent the loan is forgiven. This ensures the taxpayer does not receive a second benefit by deducting expenses that were effectively paid for by the PPP.
For more detail and guidance regarding this update, please refer to the full Notice and contact us with any questions or concerns.