This notice provides guidance regarding the deductibility for Federal income tax
purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or
business when the taxpayer receives a loan (covered loan) pursuant to the Paycheck
Protection Program under section 7(a)(36) of the Small Business Act (15 U.S.C.
636(a)(36)). Specifically, this notice clarifies that no deduction is allowed under the
Internal Revenue Code (Code) for an expense that is otherwise deductible if the
payment of the expense results in forgiveness of a covered loan pursuant to section
1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public
Law 116-136, 134 Stat. 281, 286-93 (March 27, 2020) and the income associated with
the forgiveness is excluded from gross income for purposes of the Code pursuant to
section 1106(i) of the CARES Act.
Read full Notice here: https://www.irs.gov/pub/irs-drop/n-20-32.pdf