Posted by Robert Bryant, Esq., CPA on 12.22.20

There are many intriguing tax provisions which appear in year-end coronavirus relief bill, which was just passed by Congress and enacted into law with the President’s signature. For purposes of the impact on the 2020 R & D tax credit, Congress has defied the recent positions taken by the IRS and have instead allowed for the deductibility of Paycheck Protection Program (PPP) loans forgiveness on a taxpayer’s tax return. 

While the new law maintains that gross income does not include any amount that would otherwise arise from the forgiveness of a PPP loan, the bigger provision relates to the deductibility of those funds. The new law clarifies, among other things, that the deductions will be allowed for otherwise deductible expenses paid with the proceeds of a PPP loan, which were forgiven by the SBA. 

The implications of this is new law on the R & D tax credit is profound. Here, the new law allows qualifying R & D taxpayers to help rebound from this devastating pandemic in a meaningful manner. 

Please contact Tax Point Advisors for a full analysis of the ramifications of this latest tax implications on your R & D tax credit claim.