Does an EIDL count as income?

[saanlo-msn-com]

I understand the EIDG advance is not taxable but what about the EIDL loan?

[MaryK4]

The EIDL loan is not income because you are obligated to pay it back.  NOTE: You may also be able to deduct any interest incurred as a business expense.

[Graysonmae]

Then how would you book it in quickbooks online, (the eidl loan)? We used it for debts and payroll. Our one managing member in the llc works everyday and was paid from the eidl as a salary for work performed as covid affected our income. Is it just putting it on the books so they may be paid as their pass through for their salary? 

[Graysonmae]

Hoping @MaryK4 knows 🙂 

[DianeW777]

The loan becomes capital once it is forgiven, expenses are all deductible as usual. It's just a matter of accounting (no pun intended) for the influx of cash. It would never be considered income whether or not it must be paid back under the current tax law for these funds.

If it were a loan you would credit your liability and debit cash, if it becomes forgiven, then it is no longer a loan it would be a debit to the liability with a credit to capital.  The bills and/or salary are paid from the cash account.

Please update if you need further assistance.

@Graysonmae

[Edited: 03/02/2022 | 5:10a PST]

[Graysonmae]

@DianeW777 Thank you so much. 

[Graysonmae]

@DianeW777 It's still a loan, just now using it for debts and salary