The new federal coronavirus relief package now allows for deductions for payments of eligible expenses related to forgiveness of Paycheck Protection Program loans.
The Internal Revenue Service has issued new guidance to reflect changes in the Tax Relief Act of 2020, which Congress passed Dec. 21.
The legislation amended the the CARES Act to say that no deduction is denied, no tax attribute is reduced, and no basis increase is denied by reason of the exclusion from gross income of the forgiveness of an eligible recipient’s covered loan.
The new guidance contained in Revenue Ruling 2021-02 makes obsolete previous guidance from the IRS.
The nearly $900 billion relief package approved in late December includes $284 billion set aside for a second round of forgivable PPP loans.
The loans have been expanded to include nonprofits, local newspapers, and television and radio broadcasters.
The package also earmarks $12 billion for minority-owned and very small businesses that had difficulty obtaining loans during the first round of PPP funding.
Nationwide, the Small Business Administration issued $525 billion in loans to over 5.2 million businesses.
In Connecticut, more than 63,000 businesses received PPP loans totaling more than $6.6 billion, according to the SBA.
Visit the IRS website for more information on the Tax Relief Act of 2020 and other tax changes.