Congress Sets the IRS Straight on PPP Deductibility

Yesterday, Congress overruled the IRS on the issue of the deductibility of expenses paid with PPP loans.  The expenses are now clearly fully deductible. Section 278 (Page 2004) of The Consolidated Appropriations Act, 2021 leaves little question that the IRS rulings on PPP deductibility were contrary to congressional intent.

We rarely see statutory language so beautiful:

For purposes of the Internal Revenue Code of 1986 –

(1) no amount shall be included in the gross income of a borrower by reason of forgiveness of indebtedness described in section 1109(d)(2)(D) of the CARES Act,

(2) no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by paragraph (1) …

I omitted the technical stuff that follows.

  • Mark S Gleason CPA
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