Last Updated: 1/9/2021

Forgiven Loans

• If the loan is forgiven in part or in whole, the part that is forgiven will not be treated as taxable income.

• This is a departure from normal IRS debt forgiveness rules. Spelled out in Notice 2020-32.

• The bill passed December 2020 also requires the SBA to make available within 24 days of enactment a new one page forgiveness application form which eliminates most of the hoops the earlier versions asked you to go through including all of the expense/ payroll documentation. This applies to loans of less than $150k. You still need to preserve and maintain (for 4 years) the support in case of audit . There is more language to this in the bill but this is the short version. Check the SBA site for this new form.

Calculating Expenses

• The expenses used to calculate your level of forgiveness (payroll, rent, utilities, benefits) are deductible in arriving at your taxable income. This was change via the new bill passed at the end of Dec. 2020.

• If you received the EIDL advance ($1,000/ employee up to $10k) it will no longer reduce the amount of your PPP forgiveness. This was also part of the new bill passed at the end of Dec 2020.

PPP Second Draw

Who is eligible? not more than 300 employee, have used and will use the full amount of their 1st PPP loan and demonstrate at least a 25% reduction in Gross Receipts in the 1st, 2nd or 3rd quarter of 2020 relative to the same quarter in 2019. Other restrictions apply. Confused? Call us at (508) 384-2700 x 103.