Reporting PPP Loan Forgiveness on Tax Returns

Even though the forgiveness of a PPP loan doesn’t result in taxable income, there’s still reporting requirements on 2021 returns. The IRS says there are 3 options for handling the tax-exempt income: (1) treat it as such when expenses paid or incurred, (2) when an application for PPP loan forgiveness is filed, or (3) when the forgiveness is granted. Instructions to 2021 returns provide details. For example, instructions to Form 1120-S for S corporations spells this out in the “What’s New” section. #IdeaoftheDay

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