It’s no secret that COVID-19 financial relief measures have helped businesses keep their doors open through nationwide shutdowns and strict guidelines for the prevention of the spread of the novel Coronavirus, but these measures have also left business owners (and taxpayers alike) confused about how these items would be treated for tax purposes. The IRS recently released a package of revenue procedures including Rev. Proc 2021-48, 2021-49 and 2021-50.
Rev. Proc. 2021-48: Timing issues
This revenue procedure gives taxpayers options on timing to report the Paycheck Protection Program (PPP) loan forgiveness as tax exempt income. Those options include:
The guidance also:
Rev. Proc. 2021-49: Allocation issues
This revenue procedure provides guidance to partnerships and consolidated groups regarding amounts excluded from gross income and deductions relating to the PPP and certain other COVID-19 relief programs.
Rev. Proc. 2021-50: Amended returns
This guidance allows eligible partnerships subject to the centralized audit rules under the Bipartisan Budget Act to file an amended return by December 31, 2021 rather than an AAR to take advantage of the newly released revenue procedures.