According to Rev. Proc. 2021-48, taxpayers may treat the tax-exempt income associated with PPP loan forgiveness as received or accrued:As eligible expenses are paid or incurred; When an application for PPP loan forgiveness is filed; or When PPP loan forgiveness is granted.
People also ask
When to treat PPP loan forgiveness as tax-exempt income?
Rev. Proc. 2021-48 covers the timing of receipt of PPP forgiveness tax-exempt income. Taxpayers may treat such income as received or accrued when either (1) expenses eligible for forgiveness are paid or incurred; (2) an application for PPP loan forgiveness is filed; or (3) PPP loan forgiveness is granted.
Are PPP loans tax-exempt?
Such forgiveness is excluded from gross income under 7A (i) of the Small Business Act, therefore treated as tax-exempt income for partnerships under 705 S corporations under 1366 of the Code. Taxpayers have 3 options for when to treat PPP loans as tax-exempt income: When eligible expenses are paid or incurred.
What happens to my PPP loan in 2021?
The PPP loan participant is notified by their lender in 2021 that forgiveness of all or part of their PPP loan is denied If a taxpayer intends to utilize the safe harbor procedures and deduct eligible expenses, a statement titled 鈥淩evenue Procedure 2020-51 statement鈥?must be attached.
What is the income statement impact of PPP loan forgiveness under IAS 20?
The income statement impact of any loan forgiveness under IAS 20 may either be presented separately or be offset against the related expenses. A borrower applying IAS 20 by analogy should not present the income statement impact of any PPP loan forgiveness as revenue.