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How to Report PPP Loan on 1120-S / Balance Sheet?

Forum|Forum|5 years ago
January 4, 2021
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S Corp received roughly $35,000 in PPP loans in 2020, and no repayments have been made (deferred for 2 years). The business has not yet applied for forgiveness, but anticipates 100% forgiveness. In addition, Congress passed into law the ability to fully deduct expenses paid by forgiven PPP loans, but not sure if that is relevant in this case.

How/Where should this PPP loan be reported on Form 1120-S / Balance Sheet?

TurboTax Business Windows

Best answer by Anonymous_

Clearly you have an increase (debit) in cash on the asset side and need to increase (credit) a liability account on the liability/shareholders' equity side (most likely notes payable in one year or more or other liabilities).

A

Anonymous_Answer

Employee

Clearly you have an increase (debit) in cash on the asset side and need to increase (credit) a liability account on the liability/shareholders' equity side (most likely notes payable in one year or more or other liabilities).

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jprince1

My PPP loan is in process being forgiven. so obviously it wont affect my filing this year. so do I just enter my PPP loan amount in the other income section of turbo tax business? I was also given an EIDL grant by the SBA of 1000.00 Do I also enter that in the other business income section and specify what it is?

Thanks

T

ThomasM125

@jprince1

If you think the PPP loan will be forgiven, then you won't report it as taxable income in TurboTax. You would report it on line 16(a) as Other Tax-Exempt Income if you are filing a form 1120-S. It would appear on your financial statement as either loan payable or other income, so there may be a reconciliation issue if you report your balance sheet on your tax return. This will be handled by the entries in Schedule M-1 and M-2 in TurboTax and on your corporate income tax return.

The EIDL grant is normally taxable, but there may be more guidance on that by the IRS in the near future. You would enter it as other income in TurboTax, if it is taxable.

[Edited 1/25/21 1:31PM PST]

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G

GaryRichards

I have a similar problem. My loan was granted and forgiven in calendar year 2020 so I consequently do not have any long or short term debt. I'm not sure how to categorize the loan deposit on the income side or how to handle the funds on the balance sheet.

C

clove1

Same issue. Following this thread.

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FNSCPA4444

The PPP Loan Forgiven Is Not Taxable Income And all the expenses Paid From it are deductible

DaveF1006

PPP loans are bookkeeping issues NOT an income tax issue. Although, this forum is reserved strictly for Tax purposes, I can offer some guidelines that maybe helpful.

In your books you will either :

1) count the loan proceeds as income and take the expenses you paid with it as deductible expenses like normal.

OR

2) enter the loan as a loan on the books and once it is forgiven you must also reduce your expenses by the amount of the forgiven loan.

Either method is correct as long as you are consistent in it's application. Option 1 is the easiest for most folks.

Your balance sheet is prepared based on your books and records. You will need to prepare / include an adjustment in the Schedule M-1 section of the software to handle the difference between book and tax.

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