Bradley attorney Bruce Ely was quoted in the Birmingham Business Journal on the Alabama Department of Revenue's (ADOR) supplemental guidance for Alabama taxpayers regarding the Paycheck Protection Program. ADOR noted that Alabama “C” corporations and financial institutions can deduct their business expenses funded by PPP loan proceeds, and individuals can deduct expenses paid with PPP loan amounts that have been forgiven or that the taxpayer reasonably expects to receive forgiveness.
Ely said this is a big deal to businesses that have or will take out a PPP loan.
"Based on their revised guidance, both individuals and corporations/banks can exclude PPP loan forgiveness from their federal and Alabama income tax, and both can also deduct their PPP-related business expenses on both tax returns," Ely said. "The latter benefit was a retroactive amendment, so it covers PPP borrowers who have already borrowed the money but were advised they couldn’t deduct their expenses funded by their loan, based on IRS pronouncements."
“Tax practitioners are no doubt pleased with the Department of Revenue’s favorable ruling on whether our clients can deduct their business expenses that were, or will be, funded with PPP loan proceeds. I thank the leadership of the Alabama Society of CPAs for pursuing this guidance for their members,” he said.
The original article, "Alabama Issues Key Tax Guidance on PPP," appeared in the Birmingham Business Journal on January 8, 2021.