PPP forgivable loan to S corp.

[HRS]

S corp has received the PPP loan and its is forgivable, and nontaxable income, How do I account it in the book ? Thank you for reply in advance.

[rbynaker]

S corp has received the PPP loan and its is forgivable, and nontaxable income, How do I account it in the book ? Thank you for reply in advance.

Dr. PPP Loan Payable xxx.xx

Cr. Other Income:Nontaxable PPP Loan Forgiveness xxx.xx

To record forgiveness of PPP loan.

And then (at least under the IRS's current interpretation):

Dr. Other Expenses:Nondeductible PPP Loan Expenses xxx.xx

Cr. Salaries & Wages xxx.xx

To record non-deductible expenses per IRS notice 2020-32.

I suspect that many folks will just use a contra-expense account to reduce the overall expenses for tax purposes, rather than adjust salaries & wages directly.

Rick

[HRS]

Thank you rbynaker -Rick for prompt reply, so the following entry will be Balance Sheet item and the 2nd part will be Profit & Loss item ?

1. Dr. PPP Loan Payable xxx.xx
Cr. Other Income:Nontaxable PPP Loan Forgiveness xxx.xx
To record forgiveness of PPP loan.

2. Dr. Other Expenses:Nondeductible PPP Loan Expenses xxx.xx
Cr. Salaries & Wages xxx.xx
To record non-deductible expenses per IRS notice 2020-32.