Today, the Treasury and IRS issue formal guidance in Revenue Ruling 2021-02 https://www.irs.gov/pub/irs-drop/rr-21-02.pdf allowing tax deductions for eligible expenses tied to forgiven PPP loans, revoking last year’s rules as required under the COVID-related Tax Relief Act of 2020, enacted as part of the Consolidated Appropriations Act, 2021 (Act), Public Law 116-260, which was signed into law on December 27, 2020.
“Accordingly, Notice 2020-32 and Rev. Rul. 2020-27 are declared obsolete. This obsoleted guidance disallowed deductions for the payment of eligible expenses when the payments resulted (or could be expected to result) in forgiveness of a covered loan.”
By Mark Friedlich, Esq., CPA.