PPP Loan Forgiveness Affect on M-1

[sam_ln]

Hi @AliciaP1 ,

I have the same problem after following your suggestions about adding the PPP forgiveness in the "Other permanent income items", and "other permanent expense items".  The K1 form now has 16(B) and 16(C) with the same amount of PPP forgiveness. I'm wondering how to remove the duplicate 16C?

Thank you.

[sam_ln]

Hi @DD-DB111 ,

I'm having the same situation as you. I'm wondering if you have removed the 16C on the K-1 form? Since 16C is a "nondeductible expenses", I'm concerned that it might increase my personal tax return's income.

Thank you.

[Rebecca Fields]

It is unfortunate that there are so many answers that completely contradict each other.  If Intuit is creating software for tax returns, shouldn't they be responsible to provide a definitive answer.  

[DD-DB111]

To Sam_In No Sam, I didn't, I ran my K-1 through Turbotax personal and having the PPP on lines 16B & C did not make a difference on my return, so I left it alone.  Not sure if that is correct or not, but that is the way I e-filed it.

[SteveArnold]

I echo Rebecca's sentiment--this topic has gone in many circles and there doesn't seem to be a solution that one can have confidence in. Anyone want to give a definitive answer?

[AliciaP1]

PPP Forgiveness and the creation of tax-exempt income that could be offsetting expenses reported in a prior year makes for complex accounting and tax situations.  TurboTax Business is accurate for Partnership returns and TurboTax Self-Employed and TurboTax Home & Business are accurate for Schedule C filers with PPP loans.  Unfortunately, there is a known issue, in TurboTax Business for S-Corp filings, that does not report the PPP loan forgiveness correctly.  We have provided this help article so you can enter the workaround on your S-Corp return so it can be filed correctly.  The steps are valid whether you have imported your information from Quickbooks or not.

How do I change a PPP loan imported by QuickBooks to nontaxable income for my S corporation?

@SteveArnold

[SteveArnold]

AliciaP1, has this error been fixed? I filed my return with incorrect information, and now I need to correct it and file an amended return. I'd like to get it right and the PPP Forgiveness seems to be double counted, even after changing the interview question to "no".

[flatstonellc]

Hi,

Now I'm confused. I'm using TurboTax Business. Shall I follow your "workaround" (answering no and add a permanent income entry) in your earlier post in this same discussion?

[AliciaP1]

Yes.  There will not be a change to the system for this tax year so you need to do the workaround in order to report the PPP forgiveness correctly.

See PPP Loan for the detailed steps.

@flatstonellc

[Mathfriend]

For a C-Corp filing for 2020 for Fiscal Year 7/1/2019 thru 6/30/2020 there is no Line 16a on the schedule K.  Line 16 on the schedule K asks if there was a change of ownership that was 80% or more….   What do I do?

[Mathfriend]

In my last the dates should have been for the tax year 2020 for dates 7/1/2020 thru 6/30/2021.  Sorry for the confusion.

[AliciaP1]

You use line 16 on Schedule K for an S-Corp (Form 1120S).  

A C-Corp only reports the tax-exempt income on the Schedule M-2 of Form 1120.

@Mathfriend