Posted 7/29/2020 09:13 (#8402618 - in reply to #8402585) Subject: RE: How many farmers got PPP loans?
The IRS has said the expenses paid with PPP proceeds are not deductible - the PPP is not considered taxable income so the IRS will disallow expenses paid from those proceeds.
At least one senator (Grassley) has said that isn't Congressional intent. Although neither of the new Senate bills seem to address the issue, which leaves the IRS declaration stand.
However, and I haven't checked this through my circle of CPA/tax professionals yet, it seems to me that for the sole proprietor Sch F with no employees, electing the 24-week covered period may mean the entire PPP loan becomes 'owner compensation replacement' or profit, and therefore the issue of expenses paid with those monies becomes moot. As compared to the sole proprietor with employees who keeps a portion of the PPP as owner compensation replacement, and pays a portion of the PPP out as payroll which portion currently, as the IRS has stated, would be not an allowed deduction for hired labor expense.