Initial Guidance for PPP and R&D Tax Credits: Setting the Stage for Congress to Act

Initial guidance issued by the IRS regarding the PPP treatment on 2020 tax returns is not exactly positive for taxpayers claiming the R&D credit. (see: https://www.irs.gov/pub/irs-drop/rr-20-27.pdf).

To paraphrase the Rev. Rul., any PPP loan amount should be not be able to be deducted from general expenses taken in that year. Using the “Tax Benefit Rule”, a moniker for various court cases that created a rule*, the IRS’s current position is that taxpayers must cancel out an equivalent…