In the 2021 online software there are questions relating to the timing of the PPP loan forgiveness which will generate a statement that is included with the 1040 tax return. I am a sole proprietor that received a PPP loan in 2020 that was 2.5 x my 2019 net profit monthly amount, used that monies as owner's compensation replacement in 2020, and filed my 2020 return with the PPP loan on my balance sheet. I filed for forgiveness in early 2021 and received full forgiveness later in 2021, and am a cash basis business. What are the ramifications with the three different timing options? Would I have to amend my 2020 return if I selected when expenses were incurred (2020) therefore I should select either when I applied for forgiveness or received forgiveness? And when they ask if I received forgiveness by the tax filing, which year are they referring to 2020 or 2021? I just need some help in how to answer this to where I don't cause any additional tax or accounting issues. It's very confusing. Any assistance is greatly appreciated.
