We now have official guidance from the I.R.S. that the advice provided by our Firm related to not being able to deduct eligible expenses related to PPP loans in 2020 is confirmed. While most PPP loans will not be forgiven in 2020 due to the time provided between the banks and the SBA to review forgiveness applications, you still cannot deduct the eligible expenses in 2020. To the extent that all or part of your PPP loan is forgiven in 2020 or if you reasonably expect all or a part of you loan to be forgiven, you cannot deduct the eligible expenses in 2020. If you have uncertainties related to your forgiveness amount, you may want to file extensions until you have certainty on the forgiven amount. Revenue Ruling 2020-27
If any part of your PPP loan is not forgiven, then you can deduct expenses paid with this unforgiven portion. Such expenses can be deducted on the original, timely filed, including extensions, 2020 tax return, on an amended 2020 tax return, or on the 2021 tax return. In Revenue Procedure 2020-51, the I.R.S. outlines these safe harbors, including the requirements to meet the safe harbor, to deduct the expenses in 2020 or 2021.