RP-2021-48; RP-2021-49 & RP-2021-50: Paycheck Protection Program

18 Nov 2021 2:34 PM | Anonymous

Revenue Procedure 2021-48 provides that taxpayers may treat amounts that are excluded from gross income (tax-exempt income) in connection with the forgiveness of Paycheck Protection Program (PPP) Loans as received or accrued: (1) as eligible expenses are paid or incurred, (2) when an application for PPP Loan forgiveness is filed, or (3) when PPP Loan forgiveness is granted.  To the extent tax-exempt income resulting from the forgiveness of a PPP Loan is treated as gross receipts under a particular Federal tax provision, this revenue procedure applies for purposes of determining the timing and, to the extent relevant, reporting of such gross receipts.

Revenue Procedure 2021-49 provides guidance for partnerships and consolidated groups regarding amounts excluded from gross income and deductions relating to the Paycheck Protection Program and certain other COVID-19 relief programs.  More specifically: This revenue procedure provides guidance for partners and their partnerships regarding allocations under § 704(b) of the Internal Revenue Code and  the corresponding adjustments to be made with respect to the partners’ bases in their partnership interests under § 705 of the Code. This revenue procedure also provides guidance under § 1502 of the Code and § 1.1502-32 of the Income Tax Regulations regarding the corresponding basis adjustments for stock of subsidiary members of consolidated groups as a result of tax exempt income arising from certain forgiven PPP Loans, grant proceeds, or subsidized payment of certain principal, interest and fees.

Revenue Procedure 2021-50 allows eligible BBA partnerships to file amended Forms 1065 and furnish amended Schedules K-1 on or before December 31, 2021, to adopt the guidance set forth in Rev. Procs. 2021-48 and 2021-49 if certain requirements are met.

All three of these revenue procedures will be published in Internal Revenue Bulletin 2021-49 on Dec. 6, 2021.

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