{"id":5643,"date":"2021-01-21T16:17:08","date_gmt":"2021-01-21T16:17:08","guid":{"rendered":"https:\/\/sarahf14.sg-host.com\/?p=5643"},"modified":"2021-02-23T14:33:10","modified_gmt":"2021-02-23T14:33:10","slug":"relief-package-good-for-u-s-innovation","status":"publish","type":"post","link":"https:\/\/taxops.com\/relief-package-good-for-u-s-innovation\/","title":{"rendered":"Year-end 2020 relief package good for U.S. innovation"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">By <a href=\"https:\/\/taxops.com\/team\/mark-dunning\/\" target=\"_blank\" rel=\"noreferrer noopener\">Mark Dunning<\/a><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"1200\" height=\"628\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/01\/2020-900-billion-relief-package-good-for-U.S.-innovation-2.png\" alt=\"U.S. flag in front of business building, R&amp;D credits provisions in year-end 2020 relief package good for U.S. innovation by Mark Dunning, lead partner at TaxOps Miniminization.\" class=\"wp-image-5649 lazyload\" data-srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/01\/2020-900-billion-relief-package-good-for-U.S.-innovation-2.png 1200w, https:\/\/taxops.com\/wp-content\/uploads\/2021\/01\/2020-900-billion-relief-package-good-for-U.S.-innovation-2-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2021\/01\/2020-900-billion-relief-package-good-for-U.S.-innovation-2-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1200px, 100vw\" \/><noscript><img decoding=\"async\" width=\"1200\" height=\"628\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/01\/2020-900-billion-relief-package-good-for-U.S.-innovation-2.png\" alt=\"U.S. flag in front of business building, R&amp;D credits provisions in year-end 2020 relief package good for U.S. innovation by Mark Dunning, lead partner at TaxOps Miniminization.\" class=\"wp-image-5649 lazyload\" srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/01\/2020-900-billion-relief-package-good-for-U.S.-innovation-2.png 1200w, https:\/\/taxops.com\/wp-content\/uploads\/2021\/01\/2020-900-billion-relief-package-good-for-U.S.-innovation-2-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2021\/01\/2020-900-billion-relief-package-good-for-U.S.-innovation-2-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1200px, 100vw\" \/><\/noscript><\/figure>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p><em>Certain expenses related to the Paycheck Protection Program (PPP) are now deductible, the result of tax changes found in the year-end 2020 relief package. <\/em><\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">The Consolidated Appropriations Act of 2020 (enacted December 27, 2020) and related guidance (<a href=\"https:\/\/linkprotect.cudasvc.com\/url?a=https%3a%2f%2flnks.gd%2fl%2feyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMjgsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMTAxMDYuMzI4NzcyMTEiLCJ1cmwiOiJodHRwczovL3d3dy5pcnMuZ292L3B1Yi9pcnMtZHJvcC9yci0yMS0wMi5wZGYifQ.o70KdbdcVnvxbV4i5WolC0FQvr-s0A7h2QeACk1-6RQ%2fs%2f14172341%2fbr%2f92721577209-l&amp;c=E,1,_JwX7s3svm2TwuXgMADZyYHqEDY2V_rLTF5fuW0NkQuqQn9PESGWgeRe2By3TOCi-QUnOvnss49_HScbyeSRjEkiVVsRV8LQfCXW8LiFmgVGmzo4O9Is&amp;typo=1\" title=\"IRS Rev. Ruling 2021-2\">Revenue Ruling 2021-2<\/a>) amended the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to say that no deduction is denied, no tax attribute is reduced, and no basis increase is denied by reason of the exclusion from gross income of the forgiveness of an eligible recipient\u2019s covered loan. This change overrides earlier IRS positions, making Notice 2020-32, 2020-21 and Rev. Rul. 2020-27 obsolete, that disallowed deductions for the payment of eligible expenses when the payments resulted (or could be expected to result) in forgiveness of a covered loan.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>The Takeaway<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Under the ruling and subsequent IRS guidance, the R&amp;D credit will not be decreased due to the government funding for PPP loans. In other words, PPP loans are deductible, with no attributes reduced, for taxable years ending after March 27, 2020.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is welcome news for businesses engaged in U.S. innovation, the self-same businesses expected to spur recovery efforts. An earlier revenue ruling in March 2020 (<a href=\"https:\/\/www.irs.gov\/pub\/irs-drop\/n-20-32.pdf\" title=\"IRS Notice 2020-21, deductibility of PPP expenses\">Notice 2020-32)<\/a> said PPP loans would not be deductible. It qualified that any wages paid to employees using forgiven PPP loan proceeds would not have been eligible as QREs, thus, decreasing federal and state R&amp;D credits. In the initial guidance, any wages paid to employees using forgiven PPP loan proceeds would not have been eligible as QREs, thus, decreasing federal and state R&amp;D credits. This interpretation reflected the Internal Revenue Code Section 41(d)(1)(A), which stated a taxpayer cannot claim an R&amp;D tax credit on expenditures (employee wages tend to be a large component of the qualified research expenses) that are not deductible.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"mailto:info@sarahf14.sg-host.com\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"Comments and questions to info@taxsops.com\">Reach out<\/a> to Mark Dunning with questions or visit IRS.gov for more information.&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>Contact Mark Dunning, lead partner at TaxOps Minimization, at mdunning@taxops.com. <\/p><\/blockquote>\n\n\n\n<div style=\"height:48px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"mailto:mdunning@sarahf14.sg-host.com\" target=\"_blank\" rel=\"noreferrer noopener\">Book Time<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:48px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">More Tax News<\/h3>\n\n\n<ul class=\"wp-block-latest-posts__list wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/auditor-independence-in-the-age-of-private-equity\/\">Auditor Independence in the Age of Private Equity: What CFOs Need to Know<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/r-d-credits-for-software-companies\/\">R&amp;D Credits for Software Companies: Scrum Teams, Qualifiers, and Section 174 After OBBBA<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/section-174-decoupling-what-tax-pros-need-to-know-state-by-state\/\">Section 174 Decoupling: What Tax Pros Need To Know State By State<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/sean-espy-new-partner\/\">TaxOps Welcomes Sean Espy as Partner, Tax Minimization<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/state-nexus-demystified-navigating-tax-compliance-after-wayfair-episode-1-2\/\">Your Tax Footprint Is Probably Bigger Than You Think: What Finance Leaders Need to Know About State Nexus<\/a><\/li>\n<\/ul>\n\n\n<div style=\"height:48px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<strong>Follow Us<\/strong><br>\n<a href=\"http:\/\/www.linkedin.com\/company\/201050\" target=\"_blank\" rel=\"noopener noreferrer\"><i class=\"fa fa-linkedin-square fa-2x\"><\/i><\/a>\n<a href=\"https:\/\/twitter.com\/taxops\" target=\"_blank\" rel=\"noopener noreferrer\"><i class=\"fa fa-twitter-square fa-2x\"><\/i><\/a> <a href=\"https:\/\/www.sarahf14.sg-host.com\/prospects\/connect-with-us\/\" target=\"_blank\" rel=\"noopener noreferrer\"><i class=\"fa fa-envelope-square fa-2x\"><\/i><\/a>\n","protected":false},"excerpt":{"rendered":"<p>By Mark Dunning Certain expenses related to the Paycheck Protection Program (PPP) are now deductible, the result of tax changes found in the year-end 2020 relief package. The Consolidated Appropriations Act of 2020 (enacted December 27, 2020) and related guidance (Revenue Ruling 2021-2) amended the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":5649,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","spt_transcript":"","footnotes":""},"categories":[78,226],"tags":[447,459,92,532,538,48,553,50,563,592,609],"class_list":["post-5643","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax-savings","category-tax-news","tag-eligible-expenses","tag-expenses","tag-irs","tag-paycheck-protection-program","tag-ppp","tag-rd","tag-relief-package","tag-research-credit","tag-research-expenses","tag-stimulus-bill","tag-tax-changes"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2021\/01\/2020-900-billion-relief-package-good-for-U.S.-innovation-2.png","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/5643","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/comments?post=5643"}],"version-history":[{"count":2,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/5643\/revisions"}],"predecessor-version":[{"id":7018,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/5643\/revisions\/7018"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/5649"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=5643"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=5643"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=5643"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}