Revenue Ruling 2020 27

Here s what you need to know.

Revenue ruling 2020 27. Contemporaneous with the release of revenue ruling 2020 27 the irs published revenue procedure 2020 51 which provides a safe harbor for those taxpayers who did in fact guess wrong in 2020 or. The guidance came in the form of a revenue ruling rev. 2020 27 which addresses the issue of borrowers who pay expenses in 2020 but whose ppp loan is not forgiven until 2021 and a revenue procedure rev. The irs just released revenue ruling 2020 27 and revenue procedure 2020 51 to clarify the rules for deducting expenses paid with ppp funds.

On november 18 2020 the irs released revenue ruling 2020 27 providing additional guidance on the deductibility of eligible expenses paid for with paycheck protection program ppp funds. 2020 27 directing that a taxpayer who received a paycheck protection program loan and paid otherwise deductible expenses with the proceeds may not deduct those expenses in the year they were incurred if the taxpayer reasonably expects to receive forgiveness of the loan. On november 18 2020 irs issued rev. 2020 51 that provides a safe harbor for ppp borrowers that have their loan forgiveness denied or who choose not to request loan.

636 a 36 covered loan and paid or incurred certain otherwise deductible expenses. This ruling confirmed that ppp expenses are not deductible on borrowers 2020 tax returns if the borrower has or plans to apply for forgiveness and has reasonable expectation forgiveness will be granted. The irs issued revenue ruling 2020 27 that addresses when a borrower should exclude the expenses used to obtain forgiveness of their payroll. 2020 27 provides guidance for situations in which forgiveness has not yet happened before the end of the tax year.

In conjunction with this guidance the irs issued rev. This revenue ruling serves to clarify and expand on issues first raised in notice 2020 32 published on april 30 2020. 2020 27 issue may a taxpayer that received a loan guaranteed under the paycheck protection program ppp authorized under section 7 a 36 of the small business act 15 u s c. On november 18 2020 the internal revenue service irs issued revenue ruling 2020 27 to address questions surrounding the timing and nature of tax items attributable to paycheck protection program loan forgiveness.