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Focus on Taxation: Interaction between Paycheck Protection Program Loan Forgiveness and the Research & Experimentation Tax Credit

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Taxpayers that received a Paycheck Protection Program (PPP) loan for which forgiveness will be sought that also claim the Research & Experimentation (R&E) tax credit must consider the potential impact PPP loan forgiveness could have on the R&E tax credit.
October 7, 2020

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Taxpayers that received a Paycheck Protection Program (PPP) loan for which forgiveness will be sought that also claim the Research & Experimentation (R&E) tax credit must consider the potential impact PPP loan forgiveness could have on the R&E tax credit.

PPP loan forgiveness is based, in part, on wages incurred. It is possible that these same wages could be included as qualified research wages in the calculation of the R&E tax credit. If wages are used for PPP loan forgiveness, as of now under IRS Notice 2020-32, these wages are not deductible for tax purposes.

In order for wages to qualify for the R&E tax credit they must be deductible. As such, great care must be exercised when computing PPP loan forgiveness in consideration of its impact on the R&E tax credit. RubinBrown has developed certain strategies to help assure that you maximize your overall benefit.

The team at RubinBrown possesses in-depth knowledge on PPP loan forgiveness, the R&E tax credit and the interaction between the two. We encourage you to contact your tax advisor if you have any questions with PPP loan forgiveness, the R&E tax credit or how to maximize the benefit of both.

 

Readers should not act upon information presented without individual professional consultation.

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

 

Research & Experimentation Tax Credit Services Overview

 


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