IRS confirms PPP expenses are deductible in Rev. Rul. 2021-2
On January 6, 2021 the IRS released Rev. Rul. 2021-2 which implements the provision of Consolidated Appropriations Act, 2021 allowing taxpayers to deduct otherwise deductible expenses, the payment of which results in, or are expected to result in, the forgiveness of a loan under the Paycheck Protection Program (PPP).
Prior to the enactment of the Consolidated Appropriations Act, 2021, on December 27, 2020, the IRS had taken the position, in Notice 2020-32 and Rev. Rul. 2020-27, that otherwise deductible expenses may not be deducted if such expenses result in, or are expected to result in, the forgiveness of a PPP loan. Rev. Rul. 2021-2 declares obsolete the prior guidance provided by Notice 2020-32 and Rev. Rul. 2020-27.
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Published on January 8, 2021
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