Originally, businesses were advised that they couldn’t deduct expenses covered by PPP loan forgiveness. Then the Consolidated Appropriations Act, 2021, made it clear they could. Now the IRS has created a safe harbor that allows fiscal year taxpayers that filed their income tax return or information return for their 2020 tax year on or before December 27, 2020 to deduct these expenses on the return for the first tax year following the taxpayer’s 2020 tax year. This avoids the need to file an amended return or administrative adjustment request for the 2020 tax year. #IdeaoftheDay
Important: The deadline for applying for a PPP loan runs through May 31, 2021.
