From what we know, when lawmakers originally passed the Paycheck Protection Program (PPP), they thought that under its provisions

you did not pay taxes on the forgiveness amount, and

you also could deduct the expenses that you paid with the PPP money.

Fly in the Ointment

In late April, the IRS issued Notice 2020-32, which asserts that PPP loan recipients may not deduct business expenses paid using the PPP monies that gave rise to forgiveness (defined payroll, rent, utilities, and interest).1

Lawmakers’ Take

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