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Did You Know that Certain Expenses May Not Be Deductible if You Received a PPP Loan?

Client Alert
May 1, 2020

On April 30, 2020, the IRS issued a Notice stating that for Federal income tax purposes, certain expenses that would otherwise be deductible in a taxpayer’s trade or business may not be deductible if the taxpayer received a loan under the Paycheck Protection Program (“PPP”).

Specifically, the IRS states that no deduction is allowed for an otherwise deductible expense if the expense’s payment resulted in forgiveness of the PPP loan pursuant to Section 1106(b) of the CARES Act. The income associated with the PPP loan forgiveness is also excluded from gross income pursuant to Section 1106(i) of the CARES Act.

For example, if a business received $400,000 in PPP loan proceeds and used the proceeds to pay $350,000 in payroll expense, $50,000 in qualifying rent and utility payments, and met all other applicable terms and conditions within the 8-week applicable period, the entire $400,000 would be forgiven. Therefore, the $400,000 PPP loan proceeds are not included in gross income. However, the $400,000 in payroll, rent, and utility expenses would also not be deductible for Federal income tax purposes.

For additional questions related to the taxability of specific income and expenses in relation to the PPP loan forgiveness, please contact BMD Tax Law Attorney Tracy Albanese at tlalbanese@bmdllc.com or (330) 253-9195.

PPP Loanpaycheck protection programsmall businessFederal Income TaxdeductionsIRSTracy L. Albaneseexpenses
Client Alert

Chemical Dependency Professionals Board Rule Changes: Part 2

April 1, 2024New rule changes for Certification of Chemical Dependency Counselor Assistants (CDCA)Client Alert

Board of Pharmacy Rule Changes

April 1, 2024Board of Pharmacy made changes to rules effective on March 4, 2024Client Alert

Counselor, Social Workers, and Marriage and Family Therapist (CSWMFT) Board Rule Changes

March 29, 2024The Counselor, Social Workers, and Marriage and Family Therapist (CSWMFT) Board has proposed changes to the Ohio Administrative Code rules discussed below. The rules are scheduled for a public hearing on April 23, 2024, and public comments are due by this date. Please reach out to BMD Member Daphne Kackloudis for help preparing comments on these rules or for additional information.Client Alert

Latest Batch of Ohio Chemical Dependency Professionals Board Rules: What Providers Should Know

March 25, 2024The Ohio Chemical Dependency Professionals Board recently released several new rules and proposed amendments to existing rules over the past few months. A hearing for the new rules was held on February 16, 2024, but the Board has not yet finalized them.Client Alert

Now in Effect: DOL Final Rule on Classification of Independent Contractors

March 21, 2024Effective March 11, 2024, the U.S. Department of Labor (DOL) has adopted a new standard for the classification of employees versus independent contractors — a much anticipated update since the DOL issued its Final Rule on January 9, 2024, as previously discussed by BMD.  In brief, the Fair Labor Standards Act (FLSA) creates significant protections for workers related to minimum wage, overtime pay, and record-keeping requirements. That said, such protection only exists for employees. This can incentivize entities to classify workers as independent contractors; however, misclassification is risky and can be costly.
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