Late yesterday, President Trump signed the new Coronavirus Aid package into law. As we shared last week, it included a few provisions that were quite important to our clients that received PPP Loans.
Your expenses paid with forgiven (or to be forgiven) PPP loan proceeds will now be tax deductible. While this is great news for all business owners, it will present a challenge for us in reporting 2020 taxable income for some businesses with negative basis on their corporate returns. What it means to you all is that if the inclusion of the expenses in your 2020 business income tax return results in a business loss, some of that loss may not be immediately tax deductible. For those of you that this will directly impact, we will reach out to you directly upon the completion of your returns to explain in further detail what the impact on the current and future tax years will be.
In addition, the simplification of filing for forgiveness for all loans under $150,000 will be available. As a result, most vendors have temporarily suspended accepting forgiveness applications until the new process is more clearly outlined and defined. While we do not know yet what this simplification will or will not include, we will keep you informed as more information becomes available.
Last, for those businesses with revenues reduced 25% or more during any quarter of 2020 vs. the same period in 2019, you may be eligible for a new round of PPP funding that was approved as part of this package. Again, as more information becomes available, we will keep you informed as to what the specifics are that would apply to you and what opportunities there may be to assist you.
Thanks and Happy New Year to you all!