I'm trying to understand the clarity from the IRS regarding the PPP, EIDL and another CARES act grant I received (I received a $5,000 from the City of San Antonio from CARE act funds I believe).
If I used funds from any of these sources, am I able to expense them on my taxes? I'm a single member LLC with no employees besides myself.
My understanding is that they cannot be expensed, but since the legislation has changed I've come across some articles that they now can be. How is TurboTax approaching this this year for their clients?
This is from an article I found online:
"In the Act, Congress reversed the IRS position. Congress provided that PPP loan forgiveness and EIDL advances (which were up to $10,000 to each business that applied for an EIDL loan) would not generate any taxable income AND all the associated expenses paid with the PPP loan and EIDL advances would be fully tax deductible. In addition, the loan forgiveness will generate additional tax basis for investors in partnerships, S Corporations, and sole proprietorships, so the investors can deduct the additional pass-through expenses. Act Sec. 276 and Sec. 278. That Act contains some tax nuances for S Corporation investors (AAA accounts) and partners (special allocations), so you should consult with your tax advisor before filing your tax return."
