Respectfully I have to disagree with your response with regard to the following. Yes PPP is completely tax free and doesn't need to be reported. However on corporate forms 1120 and 1120S on Page 5 (I think) one has the M-1 Schedule which is Reconciliation of Income (Loss) per Books With Income (Loss) per Return. One will need to somehow include your PPP forgiven loan here. For accounting purposes (not tax) in order to remove a liability (the PPP loan) from your balance sheet you'll have to debit the liability and credit income. Well if the income is not taxable it has to show up somewhere on the 1120 or 11202. M-1 is the location. For Federal purposes the expenses incurred using the PPP loan funds are still deductible expenses on 1120 and 1120S. I have not seen anything in my State that would lead me to believe that the State tax treatment doesn't follow the Federal guidelines.
