Get Ready for Taxes 2021

Washington Dec 8, 2020 – The Internal Revenue Service today encouraged taxpayers to take necessary actions in the final weeks of the year to help file federal tax returns timely and accurately in 2021. Click here for more information.

IRS PPP Loan Guidance

The IRS released two pieces of guidance relating to PPP loans.

According to Rev. Rul. 2020-27, businesses that receive PPP loans in 2020 may not deduct expenses paid with the loan funds, if they “reasonably expect” the loan to be forgiven in 2021. The revenue ruling also provides guidance if, as of the end of the 2020, the PPP loan participant has not applied for forgiveness, but intends to apply in the next taxable year.

Conversely, Rev. Proc. 2020-51 provides that if a business did not deduct expenses in 2020, and some, or all, of the loan that was expected to be forgiven, is not in fact forgiven, they may either deduct the expenses on an amended 2020 return or deduct the eligible expenses on their 2021 return if they qualify for the safe harbor.