PPP Funds Withdrawn By Owner, Is this taxable income to owner?

[WIRick]

I received PPP Funds and withdrew them as Owner Compensation Replacement.

Are these funds taxable as personal income?

I read that these funds should be included in other Self Employment Tax Income.

Is this correct?

[KristinaK]

No, the funds you withdrew as Owner Compensation Replacement (OCR) are not taxable to the owner, and should not be included as part of income subject to the self-employment tax.

Think about it this way. Were you to have employees, the PPP loan amount (if forgiven) would not be taxable income to the business, and wages paid to employees would be deductible. Sort of double-dipping.

Similarly, when you withdraw OCR, any forgiven amount that was paid as OCR is not taxable to the owner and is not deductible on the business level. 

[WIRick]

Thank you!