One of the big selling points of the much-discussed PPP loans was that, if you followed the guidelines, most if not all of the loan proceeds could be forgiven and you wouldn’t have to pay it back. Couple that with language in the cARES act which specifically states that the loan forgiveness is not taxable and it’s a good deal, no?
Well, what about the deductions you incur while spending down the loan proceeds? The IRS just ruled they’re NOT deductible — increasing taxes for these businesses. Yes, they’re relying on a statute in reaching that conclusion (Sec 265) but really? Personally I think they’re punting to Congress, putting the mess back where it should have been cleaned up before all this. Just one more hurdle for small businesses to overcome in order to survive….