(Credit: Allison Bell/ALM)
The Internal Revenue Service and Treasury Department issued new guidance Wednesday ending the prohibition on "double dipping" when it comes to expenses paid with funds from Paycheck Protection Program loans.
The new guidance allows "tax deductions for the payments of eligible expenses when such payments would result (or be expected to result) in the forgiveness of a loan under the Paycheck Protection Program."
Previous guidance said that business expenses like rent, mortgage, utilities and salaries — deductible under normal circumstances — could not be deducted if paid for with PPP funds. But that guidance is now obsolete, says IRA expert Ed Slott of Ed Slott & Co.
"The message is that's what Congress intended all along," he told ThinkAdvisor on Thursday in a phone interview.
The change aligns IRS policy with the coronavirus relief law enacted in December, Jeff Levine, Buckingham Wealth Partners director of advanced planning and Kitces.com director of advisor education, told ThinkAdvisor in a Friday email message.
