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Exact same Jim but this time the guy takes out a $20,one hundred thousand credit line in the place of an excellent PPP mortgage

February 12, 2022 Leave a comment

Exact same Jim but this time the guy takes out a $20,one hundred thousand credit line in the place of an excellent PPP mortgage

Jim fireplaces most of the their personnel and you will will pay himself an advantage. Months pass and you will Jim can’t pay off the latest type of borrowing, the lending company forgives the debt (I know I’m reaching right here however, accept me) and you may situations Jim a questionnaire 1099-C getting $20,one hundred thousand.

Jim’s taxable earnings on the year continues to be $120,100 ($200,one hundred thousand money -$100,one hundred thousand deductible expenditures + $20,100000 earnings regarding release of personal debt on LOC).

Clearly Jim is in the exact same updates regardless in the event that he will get personal debt forgiveness from the PPP otherwise through-other form. This new exemption out-of revenues only matters if you possibly could simply take this new deductions associated with the PPP mortgage forgiveness.

What is the IRS’ Cause?

Obviously, there is a whole lot more to that particular compared to the non-deductibility regarding expenses linked to the borrowed funds forgiveness. Read more…