Expenses Paid with a Forgiven PPP Loan are Deductible, IRS is Wrong
No court has ever ruled, nor would it ever rule, that cancellation of debt that is claimed to be non-taxable pursuant to existing exclusions, whether that be due to insolvency or bankruptcy under Section 108 or pursuant to Section 1106 of the CARES Act, somehow requires a taxpayer to amend prior-year returns to remove deductions attributable to the non-taxable cancellation of debt.
A Defense Of The Break Republicans Snuck Into The CARES Act
The coverage on this move, which apparently was a fast one in that the voting came before the scoring, has been negative. There is a lonely voice out there crying that rather than fooling with the effective date, 461(l) should have been retroactively repealed as it is poor tax policy and unfair.
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.