Are expenses paid with PPP loan proceeds deductible?

11-19-2020Tax Information

The U.S. Treasury Department and Internal Revenue Service (IRS) released guidance yesterday (November 18, 2020) clarifying the tax treatment of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year the loan was received. 

Since businesses are not taxed on the proceeds of a forgiven PPP loan, the expenses are not deductible. This results in neither a tax benefit nor tax harm since the taxpayer has not paid anything out of pocket.