On Sunday, December 27, President Trump signed H.R. 133 (Consolidated Appropriations Act, 2021) into law.  The bill overrides the IRS’s position on previously issued guidance (Rev. Rul. 2020-27) for taxpayers that received PPP loan proceeds and paid or incurred otherwise deductible expenses related to that loan.

PPP Loan Related Business Expenses are Tax Deductible
The bill states all business expenses paid with forgiven PPP loans are tax-deductible. This rule applies to all borrowers, even those who have already applied for forgiveness.  

Changes to Existing PPP Program

  • The bill reopens the original PPP program by setting aside $35 billion for those who have not yet borrowed.
  • New Expenses Eligible for Use/Forgiveness included in the 40% bucket
    • Covered operations expenditures
    • Covered property damage costs
    • Covered supplier cost
    • Covered worker protection
  • New Options for Covered Periods
  • Streamlined Forgiveness for Borrowers under $150,000
  • The bill expands the tranche of original PPP Loans for those who have already received and fully extinguished their original PPP proceeds and meet the following requirements
    • Fewer than 300 employees
    • Establish that they experience a 25% drop in gross receipts during a quarter in 2020 relative to that same quarter in 2019

Additional Guidance on the Way
We are monitoring developments and their implications closely and will provide additional updates as guidance is released.

Please call us with any questions. We are here to help.

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