The Consolidated Appropriations Act, 2021, passed by Congress on December 21st and signed into law by President Trump on December 27th, includes aid for small businesses and other targeted relief for certain industries, as well as stimulus payments, extended unemployment benefits and other relief for individuals.
Of particular interest to businesses that received Paycheck Protection Program (PPP) loans, the bill specifies that business expenses paid with forgiven PPP loans are tax-deductible. As a result, this legislation ensures the tax deductibility of these expenses, an outcome which was previously in doubt as a result of IRS guidance issued in the months following the PPP’s inception under the CARES Act.
The legislation also provides another round of funding for PPP loans. Businesses that meet specific requirements are eligible to apply for a second PPP loan. In addition, IRC Section 501(c)(6) nonprofit organizations are now eligible to apply for the first time.
We will provide more detailed analysis of this important and lengthy new legislation after the holidays and as more information is available. In the meantime, we wanted to share this important news with our clients and friends.
