Businesses Grapple With Deductible Expenses Paid by Virus Loans

A lack of certainty over how to treat deductible expenses covered by virus relief loans is making it difficult for tax planners to advise businesses on their quarterly liabilities.

Earlier this year, Congress enacted the Paycheck Protection Program, a coronavirus-relief measure that provides forgivable loans to struggling businesses—as long as they use the funds on certain expenses. The IRS has said in guidance that businesses can’t take normally permitted tax deductions for expenses, such as rent or wages, that are paid by forgiven loans. Some lawmakers have pushed back against that interpretation, although they haven’t ...