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
A Brave New World: Trying Causation in PFAS Cases Under CERCLA
The D.C. Circuit recently held that the EPA reasonably classified PFOA and PFOS as hazardous substances under CERCLA, clearing the way for additional cleanup and cost-recovery claims involving PFAS contamination.
Anti-SLAPP Laws on the Rise: Key Developments Since 2025
States across the country are expanding anti-SLAPP protections, with nine states enacting or strengthening laws since 2025. Most have adopted the Uniform Public Expression Protection Act (UPEPA), giving defendants new tools to seek early dismissal of lawsuits.
AI-Driven Personalized Pricing: The FTC’s New Enforcement Posture and the Broader Legal Landscape
Key Takeaways By now, we all know that artificial intelligence is a transformative tool for business. Companies are already using …
Delay Damages – Transportation & Logistics Rules for Legal Exposure and Contract Risk
Every minute matters when delivery timing is a live-or-die issue for many industries served by transportation providers. In automotive logistics line-down scenarios can be devastating to business operations.