When the CARES Act and the Paycheck Protection Program were drafted into law by Congress, it was to help small businesses in the U.S. recover from the economic shutdown. Businesses who took the PPP loan could convert it to a forgivable grant if it was spent by the businesses on specifics like employee payroll, rent, etc.
But on April 30, the Internal Revenue Service issued a notice which seems to say that the PPP money is taxable income and cannot be used as a tax deduction.
Bryson says business owners who take the PPP loan under the current tax law and have the loan forgiven will not owe taxes on the money. He says the PPP loan amount is based on pre-COVID-19 employee staffing which many businesses reopening will not need now they are operating at a lower capacity and smaller staff. In some cases like this, Bryson says business owners who took the PPP loan will have too much money to meet their obligations and could be penalized.