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UPDATE! - Tax Deductible PPP Loan Expenses

Published by Dave Danic on 02 Feb 2021

Update: PPP Loan Forgiveness Rules

Recently, the Treasury Department and Small Business Administration (SBA) released an update to the Paycheck Protection Program (PPP) for loan forgiveness forms and guidance.


Changes made by the IRS and Treasury will allow deductions for payments of eligible expenses when these payments result in or are expected to result in, the forgiveness of a covered loan under the PPP (Paycheck Protection Program).These forgiven PPP loans will now be tax-free and any normally business tax-deductible expenses paid for using PPP loans will also be tax deductible.

New Revenue Ruling 2021-02 guidance shows changes to the COVID-related Tax Relief Act of 2020.

The COVID-related Tax Relief Act of 2020 amended the CARES Act. The amendment states that “no deduction will be denied, no tax attribute will be reduced”. Also, there will be no basis increase denied for the reason of exclusion from gross income of an eligible recipients covered forgiveness loan. Note: This change will apply for the tax year ending after March 27, 2020.


Prior to this update, Notice 2020-32 and Revenue Ruling 2020-27, disallowed deductions for portions of PPP loans and may have created an unexpected tax obligation for some aspects or these loans. Notice 2020-32 and Revenue Ruling 2020-27.

Be sure to check back as we will post updates as to the PPP Loans and much more as they become available.


Summit CPA Group is a distributed virtual CFO firm with a non-traditional approach to accounting. Our amazing team of CPAs and accountants provide professional Virtual CFO Services and 401(k) Audits for companies all over the United States—many of which are remote companies as well. For more on how we can you’re your business, contact our office at 866-497-9761 to schedule a free consultation appointment today!

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