Income taxes are a perennial chore for business owners. While many tax items—deductions, credits, etc.—have new limits for 2021 due to cost-of-living adjustments and new laws, certain new items stand out. Don’t overlook the following:
1. Reporting PPP loan forgiveness
A Paycheck Protection Program (PPP) loan may have helped you get through the pandemic, but there are tax consequences to handle. While you aren’t taxed on the forgiveness of a PPP loan, there’s still some reporting to handle. The forgiveness of a PPP loan creates tax-exempt income, which in turn affects owner’s basis in entity. Rev. Proc. 2021-48 permits pass-throughs to treat tax-exempt income resulting from the forgiveness of a PPP loan as received or accrued
