PPP Loan Forgiveness is messing with my M1

[pioneerinn]

My PPP Loan Forgiveness seems to be messing with my M1 which I don't need because my assets are <$250K.  I use K-1 for my S-Corp and I'm using TurboTax for Windows desktop.  I keep getting an error message that my M1 needs an entry for Tax Exempt Interest Out of State and it tells me to delete the entry on my K-1 line 16b which is that PPP loan forgiveness amount.  What?????  The system won't let me delete the M1 form from the forms list and it won't let me e-file.  Entering the forgiveness amount into the M1 doesn't fix the issue, either.  Please let your developers know about this problem and see if they can look into it.  Or please tell me how to fix this so I can file and be done with my taxes.  Thank you!

[AliciaP1]

Your Balance Sheet does not have to be reported because your assets or sales are <$250,000, but an S-Corp with forgiven PPP funds has to report the M-1.

However, your error is a known issue and we are working to resolve this.  There is a workaround for this so you do not have to delay filing your return.

Please follow these steps:

1. In Step-by-step mode,  under Business Info click the About Your Business tab
2. Click Continue until you get to the Forgiven PPP Loan page and answer No.
3. Switch to forms mode, click on Sch M-1 Wks.
4. Under Other permanent income items add the description "PPP loan forgiveness" and the dollar amount in the Per Books column.
5. Scroll down to Other permanent expense items, list the description "PPP funded expenses" and enter the amount of covered expenses for your PPP loan.
6. On the left, click PPP Loan Stmt
7. Scroll to the bottom of the page and respond to the questions on the Smart worksheet

[pioneerinn]

Thank you for your guidance.  Your detailed instructions helped me get around the wrinkle and I just filed.  This is why I recommend Intuit....you people are paying attention to your customers and are always helpful!

[ericlhorne]

Thank you to the person who wrote this question - and to the person at Intuit who answered it.  I was having the exact same problem and the steps that were listed to solve the issue worked perfectly.  Thank you.

[fkenney7]

We did this and it caused out books to be out of balance now, is there something we should be looking to do to fix that issue now. 

[PatriciaV]

To balance Schedule M-1, you need to also enter the same amount of expenses on the M-1 worksheet on the Other expenses related to tax-exempt income in the Per Books column.