Congress reaches deal on COVID relief, PPP deductions.
Multiple media outlets report that Congressional negotiators have agreed on a COVID relief package that includes, among other tax breaks, a provision allowing taxpayers to deduct at least some Paycheck Protection Plan loan-financed expenses. Richard Rubin of the Wall Street Journal reports ($):
The provision, part of the year-end coronavirus relief bill expected to soon clear Congress, would ensure that PPP recipients can deduct the payroll costs and other expenses covered by forgiven loans, even though the loans themselves are tax-free income. The move would reverse a Treasury Department ruling that denied the deductions.
Full details of the provision, including any limits on the deduction, hadn’t been released as of Sunday evening. Sen. John Thune (R., S.D.) told reporters Sunday that the agreement includes the deduction. A GOP aide said there would be restrictions on the deduction but those limits haven’t been specified yet.
Other tax provisions reported to be in the conference agreement include:
Key non-tax provisions include $600 payments to a smaller set of taxpayers than received the $1,200 payments earlier this year and a $300 weekly supplement to unemployment benefits.
The legislation is still being drafted tonight. Tax News & Views will have updates in the morning.
Morning update, 12/21/2020:
The actual legislation is expected to be available later today. Nothing is final until the Senate votes, probably very late today, or early tomorrow.
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