PPP forgiveness book income to tax income reporting

[beavic1958]

On my 2020 corporate 1120 tax return I have a question on reporting the PPP forgiveness.
I received $47,600 in the spring of 2020 it was forgiven the total amount in October of 2020. I know it's not taxable but how do you report that in QuickBooks and TurboTax so your book income matches the tax return income and your balance sheet is balanced

[Idealtek]

I have same question.

[JotikaT2]

Proceeds from the PPP loans are not taxable income but you can deduct the expenses.

When you receive the proceeds from the PPP forgiveness, your debit should have been to cash, and your credit should have been to a nontaxable income on your income statement.

When you paid any expenses from the PPP funds, you would have had a debit to the applicable expense account and a credit to cash.

Please see the attached links for more information on PPP forgiveness.  

PPP Loan Forgiveness discussion

PPP tax implications

@beavic1958

@SCraigatHMG 

[Edited 03/02/2021 | 7:31AM PST]

[SCraigatHMG]

I have this same question.  When I followed the second link, PPP Tax Implications, I found this exerpt,

"Can I write off payroll, rent and utilities as business expenses if I used a PPP loan to pay for them?

Yes. While the IRS and Treasury Department originally said otherwise, the CRRSAA in December 2020 changed these provisions so business expenses paid for with PPP funds can be written off like everyday business expenses. The decision was effectively reversed because some businesses may have had higher taxable revenue in 2020 due to not being able to write off as many expenses."

And that excerpt seems to contradict your answer. . . which honestly would have made things work much more smoothly, the income in would have washed the expenses out. 

So basically, we're back to the original question--as I brought my Quickbooks data to TurboTax, I need to know, "What is this [PPP Loan Forgiveness] for?" and the tax lines suggested do not leave any room for income that is tax-deductible.  TurboTax-help!  Thank you!

[ReneeM7122]

You're correct.  A PPP loan is not "tax deductible" even though it is technically "income," but the IRS is not able to collect tax on it.   As such, it does not get recorded anywhere in TurboTax or on your tax return. It is a balance sheet entry that goes in Quickbooks.  

Here is a TurboTax article about PPP Loan forgiveness. 

Here is a link to the Quickbooks community that will get you started with help on how to set that up.

@SCraigatHMG

[Twinnet]

S corporation return you may report PPP & EIDL  on  M1 as other Non-Taxable income Line 5 and on Sch K1 Line 16 Code B “other Tax Exempt Income”. ‘The K1 L1 reflex’s the Business Income (Loss) which will either show a reduced Profit or an increased Loss to the full extent of the PPP & EIDL Amounts, hence the Tax deduction for monies spent. In QB once Forgiven move off your BS into Other income on your P&L and leave off of your P&L or if you want to include it create an Other Income account named “ Non-Taxable PPP” 

As to any categories that you may wish to write them off against is a personal choice as far as the Tax return yet if meticulously done can provide further support for any SBA inquiry as to the Forgivability of money expensed.