01/15/2021 - Wisconsin clarifies they will not follow federal rules on deductibility of PPP expenses.
Visit WDR for more details.
Regarding taxability of forgiven PPP #1 or #2 loans and deductibility of related expenses:
‘‘(i) TAX TREATMENT .—For purposes of the Internal Revenue
Code of 1986—
‘‘(1) no amount shall be included in the gross income of
the eligible recipient by reason of forgiveness of indebtedness
described in subsection (b),
‘‘(2) no deduction shall be denied, no tax attribute shall
be reduced, and no basis increase shall be denied, by reason
of the exclusion from gross income provided by paragraph (1),
‘‘(3) in the case of an eligible recipient that is a partnership
or S corporation—
‘‘(A) any amount excluded from income by reason of
paragraph (1) shall be treated as tax exempt income for
purposes of sections 705 and 1366 of the Internal Revenue
Code of 1986, and
‘‘(B) except as provided by the Secretary of the
Treasury (or the Secretary’s delegate), any increase in the
adjusted basis of a partner’s interest in a partnership under
section 705 of the Internal Revenue Code of 1986 with
respect to any amount described in subparagraph (A) shall
equal the partner’s distributive share of deductions
resulting from costs giving rise to forgiveness described
in subsection (b).’’.
(2) EFFECTIVE DATE .—The amendment made by this subsection
shall apply to taxable years ending after the date of
the enactment of the CARES Act.
Regarding the reduction of loan forgiveness by EIDL advance received:
SEC. 333. REPEAL OF EIDL ADVANCE DEDUCTION.
(a) DEFINITIONS.—In this section—
(1) the term ‘‘covered entity’’ means an entity that receives
an advance under section 1110(e) of the CARES Act (15 U.S.C.
9009(e)), including an entity that received such an advance
before the date of enactment of this Act; and
(2) the term ‘‘covered period’’ has the meaning given the
term in section 1110(a)(1) of the CARES Act (15 U.S.C.
9009(a)(1)), as amended by section 332 of this Act.
(b) SENSE OF CONGRESS.—It is the sense of Congress that
borrowers of loans made under section 7(b)(2) of the Small Business
Act (15 U.S.C. 636(b)(2)) in response to COVID–19 during the
covered period should be made whole, without regard to whether
those borrowers are eligible for forgiveness with respect to those
(c) REPEAL.—Section 1110(e)(6) of the CARES Act (15 U.S.C.
9009(e)(6)) is repealed.
(d) EFFECTIVE DATE; APPLICABILITY.—The amendment made
by subsection (c) shall be effective as if included in the CARES
Act (Public Law 116–136; 134 Stat. 281).