For many business owners, the Paycheck Protection Program loan journey is not over when they receive acknowledgement of loan forgiveness from their local lender and from the Small Business Administration. From a tax perspective, the map that lays out the tax impact remains unclear.
During the fourth quarter of 2020, the primary question most business owners and tax professionals grappled with was whether or not the expenses paid using PPP Loan proceeds would be tax deductible and/or whether the loan proceeds were considered taxable income. The uncertainty related to these questions made tax planning for the 2020 calendar year difficult