Client Alerts & Insights
Tax Guidance on Paycheck Protection Program (PPP)
November 19, 2020
Authored By:
The IRS has previously released guidance saying that expenses paid with Paycheck Protection Program (PPP) proceeds which would otherwise be deductible will not be permitted to be deducted. There was much hope in the business community that this ruling would be overturned since it effectively reduces the benefit of PPP by a company’s marginal tax rate.
Unfortunately, the IRS released another revenue ruling on November 18, 2020 affirming its previous stance. The ruling can be found here and essentially states that if there is a reasonable expectation that a PPP loan will be forgiven then the PPP borrower cannot deduct expenses paid for with PPP proceeds for tax purposes.
Given that this is the second time the IRS has taken this stance, it is likely that legislation would be needed from Congress to change directions.
The impact on taxes can have a significant impact on cash flows and also on financial covenant calculations under credit facilities.
For more information, please contact your Benesch representative.
Matthew P. Delguyd at mdelguyd@beneschlaw.com or 216.363.4627.
Latest News
DOJ’s National Fraud Enforcement Division Issues Corporate Enforcement Directive, Signaling Heightened Scrutiny of Corporate Fraud
DOJ’s new enforcement framework reinforces that corporate fraud investigations will remain a significant enforcement priority, particularly in healthcare, government contracting, tax and international trade.
Lessons from Kai Spears v. The New York Times Co.: A Historic Defamation Verdict
The first defamation verdict against The New York Times in more than 50 years highlights the significant litigation risks that can arise when reporting relies on inadequately vetted anonymous sources and critical editorial safeguards are not followed.
Back To Wright Line: NLRB Resets Standards for Workplace Misconduct
Employers have regained greater flexibility to address offensive or abusive employee conduct that occurs during union activity or other activity protected by the National Labor Relations Act. On September 23, 2026, the National Labor Relations Board (the “Board”) issued a significant decision in Lion Elastomers LLC, 375 NLRB No. 41, restoring the prior standard for evaluating discipline when employee misconduct occurs during protected concerted activity from General Motors LLC, 369 NLRB No. 127.
Can an Algorithm Commit a Tort? The Circuit Split Over Section 230
A growing circuit split is reshaping the scope of Section 230 immunity. While the Fourth and Ninth Circuits continue to view algorithmic recommendations as protected publisher conduct, the Third Circuit has taken a narrower approach, holding that certain algorithm-driven content recommendations may constitute a platform’s own conduct and therefore fall outside Section 230’s protections.