IRS drops a bomb and answers the question: Can a taxpayer deduct expenses related to their Paycheck Protection Program (PPP) Loans?

Summary: IRS releases guidance on deductibility of expenses related to loans forgiven under the Paycheck Protection Program.

It’s been a while since the Internal Revenue Service issued a late night batch of tax rules, but they did it again last night on November 18, 2020. They released their Revenue Ruling 2020-27 and Revenue Procedure 2020-51. Both of these address expenses that are related to the loan proceeds that were received under the PPP. In a perfect world, if the taxpayer did everything correctly under the PPP, these loans should be forgiven. Now, the IRS is saying that the expenses related to the forgiven loan are not deductible.

I still need to read through the two documents with a clear set of eyes, but in the meantime, I wanted to share links to the actual documents so you can read them for yourself.

• Rev. Rul. 2020-27
• Rev. Proc. 2020-51

There will be more written about these in the coming days, but I like to encourage everyone to read the source documents in conjunction with reading the commentary so you can make your own informed conclusion.