CliftonLarsonAllen (CLA) has released a new article addressing the three recently issued revenue procedures by the Internal Revenue Service (IRS) providing guidance with respect to the timing of tax-exempt income from PPP loan forgiveness and from certain grant proceeds and subsidized payments of principal, interest, and fees.
CLA says owners of partnerships and S corporations receive a basis increase for their share of the tax-exempt income.
"For taxpayers with insufficient basis or amounts at-risk, timing can impact the ability to deduct losses or to distribute funds to owners tax-free," the company says. "The timing also affects the computation of average annual gross receipts for determining if the entity is a small taxpayer entitled to simplified accounting methods."
CLA says the three new revenue procedures are
- Rev. Proc. 2021-48
- Rev. Proc. 2021-49
- Rev. Proc. 2021-50
For more information about each procedure, and guidance from CLA, please go to https://www.claconnect.com/resources/articles/2021/new-guidance-on-ppp-forgiveness-timing.