The expenses businesses pay to qualify for Covid-19 relief loan forgiveness don’t trigger deductions, the IRS said Thursday.
Businesses that use the loans for otherwise deductible costs can’t use those expenses to offset their taxes, the Internal Revenue Service said (Notice 2020-32). The forgiven loan funds aren’t included in businesses’ gross incomes, the agency said.
- The third and fourth coronavirus pandemic stimulus laws provided hundreds of billions in forgivable loans in an effort to help small businesses stay afloat while forced to shut their doors.
- Recipients that spend their loans on employee payroll, rent, utilities, and mortgage interest over eight weeks don’t have to pay back those amounts.