A business does not receive formal forgiveness concerning a PPP loan by the SBA until the spring of 2021. The PPP loan was for $100,000. As of 12/31/2020 the $100,000 would sit on the balance sheet and tax return as a loan.
The IRS issued a notice stating that the associated expenses of payroll, rent & utilities would not be deductible even though the actual loan itself is not taxable.
Question: What year is the adjustment made for the expense not being deductible 2020 or 2021 ?
Do we take the safe route and move the loan as of 12/31/2020 off of the balance sheet and disallow the associated expenses for 2020 ?