To Wait or Not To Wait, That is the Question
While the CARES Act provides for the exclusion of any loan forgiveness amount from gross income, it fails to address the treatment of the expenses funded by those proceeds.
Normally, expenses connected with the generation of nontaxable income must be added back. And, because of that, this “glitch” in the law, as some might call it, gave the IRS the opportunity to reiterate its position that such expenses are nondeductible.
But we all should agree that these are not normal times, right?! In fact, it seems that the “double-dipping” was expected as part of the relief package. So, there is still a chance for a Congressional correction to allow the deductions – which leads us to a few questions:
Should PPP borrowers wait or not wait to file their tax returns? Should they also wait to apply for forgiveness? Finally, what should they consider for estimated tax calculation purposes?
The article in the button below gives us a good summary of the discussion as well as presents the available options and their risks in face of the current controversy.
Please call your BST advisor to discuss your particular circumstances.
Posted on December 10, 2020 at 10:34 AM