The Treasury Department and the IRS issued guidance allowing deductions for the payments of eligible expenses when such payments would result (or be expected to result) in the forgiveness of a covered loan under the Paycheck Protection Program (PPP).

The COVID-related Tax Relief Act of 2020 amended the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to say that no deduction is denied, no tax attribute is reduced and no basis increase is denied by reason of the exclusion from gross income of the forgiveness of an eligible recipient’s covered loan. This change applies for taxable years ending after March 27, 2020.