How to Report PPP Loan on 1120-S / Balance Sheet?

[DaveF1006]

PPP loans are bookkeeping issues  NOT an income tax issue. Although, this forum is reserved strictly for Tax purposes, I can offer some guidelines that maybe helpful.

In your books you will either :

1) count the loan proceeds as income and  take the expenses you paid with it as deductible expenses like normal.

OR

2) enter the loan as a loan on the books and once it is forgiven you must also reduce your expenses by the amount of the forgiven loan.  

Either method is correct as long as you are consistent in it's application. Option 1 is the easiest for most folks.

Your balance sheet is prepared based on your books and records. You will need to prepare / include an adjustment in the Schedule M-1 section of the software to handle the difference between book and tax.   

[jprince1]

Thanks for your answer. I think I am taking option 1 just reporting it as taxable income. Do I just include it under my service receipts?

[jprince1]

Would I put the PPP loan with my service receipts or other income and specify what they are?

[Jdaw]

this information is NOT correct.

IRS determined quite a while ago that all expenses paid by PPP loans ARE deductible, and the PPP loan is NOT income

[Jdaw]

The loan is not income.  When Congress did PPP #2 they specified that the loan forgiveness is NOT income, and you can write off all expenses paid by the loan.

[DaveF1006]

It depends. Please read this Turbo Tax link by awesome Champ tagteam. They suggest  "debiting cash on the asset side and need to increase (credit) a liability account on the liability/shareholders' equity side (most likely notes payable in one year or more or other liabilities)."

[Barbara55]

My PPP loan was forgiven.  I show Liability on my Balance Sheet.  How do I record the forgiveness of the loan?

[Jdaw]

Debit PPP loan,

make an 'other income' account on your P&L. So it shows at the bottom - not where 'ordinary income' goes. Call the account PPP Loan forgiveness-not taxable.