Author - Jeremy Morgan

August 31, 2020

New IRS Guidance For Calculating PPP Loan Forgiveness Costs

Last week, the IRS issued new guidance regarding loan forgiveness under the Paycheck Protection Program (PPP) that significantly impacts certain businesses in calculating their loan forgiveness costs. Some examples include:

  • Owner-employees with less than a 5 percent ownership stake in a C- or S- Corporation are not subject to the owner-employee compensation rule, which caps the amount of loan forgiveness for payroll compensation attributable to an owner-employee.
  • Rent payments to a related party eligible for forgiveness are limited to the amount of mortgage interest owed on the property during the Covered Period that is attributable to the space being rented by the business.
  • If a business has both rent payments and sublease income related to the rent, only the net payments are eligible for forgiveness. Additionally, borrowers who work out of their homes may include only the share of covered expenses that were deductible on their 2019 tax filings (or projected 2020 filing).

If you have specific questions about this latest round of guidance or the PPP program in general, please contact your Weiss tax professional.

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