Deductions Available For Certain Expenses Paid With PPP Loan Proceeds

In March, 2020, the CARES Act established the Paycheck Protection Program which provided loans (“PPP loans”) to businesses meeting certain requirements. Subject to certain limitations, PPP loan recipients are entitled to have all or a portion of the PPP loan forgiven if the loan proceeds were used for certain “covered purposes” (either within an eight-week period or a twenty-four-week period following the PPP loan's origination date). Among these covered purposes are payroll costs, rent, and utilities – expenses that might be otherwise deductible from income. To the extent that the PPP loan is forgiven, a taxpayer is not required to include the forgiven amount in its gross income.