Forgiven But Ineligible Paycheck Protection Loan Is Income: IRS

Taxpayers who inaccurately represent that they are eligible for Paycheck Protection Program loan forgiveness, and subsequently have their loan forgiven even though they don’t meet the requirements, can’t exclude their loan forgiveness from income, the IRS Chief Counsel’s office said in a memo released Friday.

• The Paycheck Protection Program is a pandemic-relief program under which businesses could receive loans that can be fully forgiven if they were used to cover payroll expenses and certain other specified costs. The legislation creating the program exempted loan forgiveness from gross income.
• The chief counsel’s office said that the tax exclusion only applies ...