Tax & AccountingJanuary 06, 2021

IRS Issues Revenue Ruling 2021-02 Allowing Deductions for Expenses Tied to Forgiven PPP Loans

IRS Issues Revenue Ruling 2021-02 Allowing Deductions for Expenses Tied to Forgiven PPP Loans

Today, the Treasury and IRS issue formal guidance in Revenue Ruling 2021-02 https://www.irs.gov/pub/irs-drop/rr-21-02.pdf allowing tax deductions for eligible expenses tied to forgiven PPP loans, revoking last year’s rules as required under the COVID-related Tax Relief Act of 2020, enacted as part of the Consolidated Appropriations Act, 2021 (Act), Public Law 116-260, which was signed into law on December 27, 2020.

“Accordingly, Notice 2020-32 and Rev. Rul. 2020-27 are declared obsolete. This obsoleted guidance disallowed deductions for the payment of eligible expenses when the payments resulted (or could be expected to result) in forgiveness of a covered loan.”

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Mark Friedlich
Author at Tax & Accounting
Mark Friedlich, a CPA & tax lawyer, is the principal international & corporate indirect taxation analyst for Wolters Kluwer Tax & Accounting. He is a member of the U.S. Senate Finance Committee’s Chief Tax Counsel’s Advisory Board, advisor to 14 state taxing authorities, and a member of the American Bar Association’s Tax Section and AICPA’s Tax Section leadership teams. Prior to joining Wolters Kluwer he was a Managing Tax Partner at PricewaterhouseCoopers.