COVID-related Tax Relief Act of 2020

I know it feels like everything keeps changing … I want to share the latest guidance with you as it is very impactful and timely. On December 27th, the President signed the “COVID-related Tax Relief Act of 2020” (the “Act”), which is part of the “Consolidated Appropriations Act, 2021” (H.R. 133). In this act it speaks to the proper accounting and tax treatment of the PPP funds and forgiveness. The forgiveness will not be treated as non-deductible expenses. If you received the EIDL advance this also will not be treated as income. Rather the forgiveness and EIDL will be treated as an additional tax basis for the shareholder, (increase to equity). The IRS has issue Bulletin No. 2020-21 Notice 2020-32 further explaining this tax treatment.

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