CLIENT ALERT: PPP Loan Forgiveness - Deductibility of the 8-week Covered Costs

• The CARES Act clearly stated that the income associated with PPP Loan Forgiveness shall be excluded from gross income. 
• However, IRS Notice 2020-32, that was issued on April 30^th, clarifies that “…no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281, 286-93 (March 27, 2020) and the income associated with the forgiveness is excluded from gross income for purposes of the Code pursuant to section 1106(i) of the CARES Act.”
• There will likely be clarification forthcoming since the position of the IRS appears to be contrary to the legislative intent of the CARES Act on this issue.   

IRS Notice 2020-32 can be located here:  https://www.irs.gov/pub/irs-drop/n-20-32.pdf 

PPP Loan FAQs can be located here (updated as of May 3, 2020): https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf 

*The Attorneys at Levene Gouldin & Thompson, LLP are available to provide advice and counsel concerning these new statutory obligations and other matters related to COVID-19.