I am not a tax person by any means, however, I did the tax return for our S Corp. I also couldn't figure out how to make it work correctly and still stay in balance. I did include the PPP amount as other income. When the loan was received, I debited cash, credited a loan liability. When it was forgiven, I debited liability and credited other income. On the schedule K, line 16b, I put the loan amount as a code B which is other tax-exempt income. So the amount rolls out in line 1 as income but is deducted on line 16b. Hope that helps! I don't know right or wrong on that but at least I can stay in balance, get our taxes filed and the owners won't have to pay tax on the PPP amount. Should the IRS ever pay us a visit, I will ask for forgiveness as I acted in good faith. TT help told me that they don't support business tax, only personal tax questions/issues.
