March 23, 2021 - Douglas Myser

Consolidated appropriations part two. This is the second part of the Consolidated Appropriations Act, and the relevant tax provisions is contains. Section 276---Clarification of Tax Treatment of Forgiveness of Covered Loans. Under the CARES Act, the forgiveness of a PPP loan doe not give rise to taxable cancellation of debt income, or a loss attribute. However, the IRS held that expenses that gave rise to PPP loan forgiveness were not deductible. The Act reverses this rule and permits taxpayers whose PPP loans are forgiven to deduct the expenses relating to their loans to the extent they would otherwise qualify as ordinary and necessary business expenses. This rule applies retroactively to the effective date of the CARES Act so that expenses paid using funds from PPP loans previously issued under the CARES Act are deductible, regardless of when the loan was forgiven. Emergency Financial Aid Grants, in the case of a student receiving qualified emergency financial aid grant , such grant shall not be included in the gross income of the student effective with aid grants made after March 26, 2020. Consolidated appropriations part two.

Section 278---Clarification of Tax Treatment of Certain Loan Forgiveness and other Business Financial Assistance. It extends the tax relief provisions of Sec. 276 to recipients of Economic Injury Disaster Loan Advances made under Section 1110(c) of the CARES Act. Additionally, the new law extends these tax relief provisions to recipients of the SBA loan payments subsidy program (i.e.  payment of six months of principal and interest payments) for certain loans that existed on March 27, 2020 under Section 112(c) of the CARES Act.  Section 279---Authority to Waive Certain Information Reporting Requirements. This act will help some defer income and they may not need Tax Resolution Services.   The act allows the Treasury Department to waive information reporting for any amounts excluded from income by reason for the exclusion of: covered loan amounts forgiveness from taxable income: the exclusion of emergency financial aid grants from taxable income : the exclusion of certain loan forgiveness and other business financial assistance under the CARES Act.