When Congress recently passed the Consolidated Appropriations Act, 2021, it explicitly reversed the IRS’s earlier position that expenses paid with nontaxable forgiven Paycheck Protection Program (PPP) loan proceeds could not be deducted. As a result of this legislation, the IRS recently issued Revenue Ruling 2021-2, confirming that the act reversed its prior guidance in Notice 2020-32 and Rev. Rul. 2020-27, which purported to deny a “double-dip” with those deductions. Thus, for federal income tax purposes, the expenses paid with those funds should be fully deductible even if the forgiven PPP loans are nontaxable. Continue reading >