I received a loan in 2020. It was forgiven in 2021. I recorded a liability in 2020. In 2021, I reduced the liability and increased my equity. TurboTax program puts my forgiven loan on the M-1 as tax-exempt income but doesn't ask for the expenses associated with that income. So, the loss I report this year on my books is greater than what TurboTax is calculating because of the tax-exempt income. A smaller loss will certainly affect my personal income tax. Doesn't seem right. Should I manually enter the 2020 expenses paid from the loan on the schedules M-1 and M-2? What is the point in reporting the income is its supposed to be tax-exempt and the expenses tax deductible?
