Enter the amount and check yes on Line 12 of Schedule B on Form 1120-S as a debt that was forgiven. The PPP Loan amount also is reported on line 16, code B of the Shareholder K-1 as non taxable income that affects shareholder basis.
Enter the PPP Forgiven Loan amount as Other timing Income item on the Schedule M-1, it balance out the income tax/book differences and also move it to Schedule M-2 as an addition from the M-1 and as a negative Distribution to balance out the M-2 with the books.
