Sub-S Corp, filing 1120S. In 2020 received a PPP loan recorded as a liability on the balance sheet. In early 2021 the PPP loan was fully forgiven. The liability was eliminated, and forgiveness recorded as non-taxable income. In 2021 received an identical second PPP loan. This was forgiven in late 2021, the liability eliminated, and the forgiveness once again treated as non-taxable income. The second PPP loan was not on the books at the beginning or the end of the year and will not show up anywhere on the balance sheet. The first PPP loan is correctly eliminated from the balance sheet of the 1120S. However, on the M-1, double that amount is reported as non-taxable income for the forgiveness of both loans. Both entries are correct, I think, but it looks like I've doubled the non-taxable income. That screams red flag to me! Is there a better way to handle this?
