In a recent ruling Notice 2020-32 the IRS stated the business owner will not be able to deduct the payroll costs, certain employee benefits such as healthcare and other benefits, as well as interest on mortgage obligations, rent, and utilities.

The recent ruling Notice 2020-32 provides guidance regarding the deductibility for Federal income tax purposes of certain otherwise deductible expenses incurred in a taxpayer’s trade or business when the taxpayer receives a loan pursuant to the Paycheck Projection Program. 

Specifically, this notice clarifies that no deduction is allowed under the Internal Revenue Code for an expense that is otherwise deductible if the payment of the expenses results in forgiveness of a covered loan pursuant to section 1106(b) of the CARES Act.