PPP Loan + 401(k) contribution
Client has $40k of income,
Solo 401k contribution every year all predicated on the 40k.
If he applied for PPP loan and $8k gets forgiven. How do this impact the 401k contribution? For example, would he “pick up” $8k as income? offset wages? Are there other ways PPP can impact the income used to determine Solo K income/allocations?
Any guidance is appreciated.
Thank you
Permalink Submitted by Alan - IRA critic on Mon, 2020-12-21 16:32
Forgiven PPP loans are not subject to cancellation of debt income rules, and will therefore not increase earnings. Further, Congress has just reversed the IRS ruling that otherwise deductible expenses paid with forgiven PPP loans would not be deductible. Therefore, such expenses can now be deducted.