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How to enter PPP loans and EIDL grants in ProSeries

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How to enter PPP loans and EIDL grants in ProSeries

This article will help you report Paycheck Protection Program (PPP) loan forgiveness and Economic Injury Disaster Loan (EIDL) grants on business returns in the partnership, S-corporate, and corporate modules. For information on how to apply for loan forgiveness, click here.

Forgiven PPP loans and EIDL advances or grants are considered nontaxable for federal purposes.

  • Adjustments may be needed to expenses that are no longer deductible. See the Treasury and IRS Issued Guidelines for details.
  • See IRS Notice 2020-32 for additional details on the tax treatment of PPP Loan Forgiveness.
  • State adjustments may be needed if the return includes a state that doesn't conform to federal guidelines.

Follow the steps below for your return type to report the PPP or EIDL amount as tax-exempt income.

For partnership returns:

  1. Go to Schedule M-1 Items Worksheet.
  2. Under Income Items in Other Permanent Items (income), enter a description and the amount of forgiven loan or EIDL advance received.

The loan amounts will be reported on Schedule K, line 18b, as other tax-exempt income. An adjustment for the loan will generate on Schedule M-1, line 6. 

For S-corporate returns:

  1. Go to Schedule M-1 Items Worksheet.
  2. Under Income Items in Other Permanent Items (income), enter a description and the amount of forgiven loan or EIDL advance received.

The loan amounts will be reported on Schedule K, line 16b, as other tax-exempt income. An adjustment for the loan will generate on Schedule M-1, line 5. 

For corporate returns:

  1. Go to the Form 1120 p3-6.
  2. Scroll down to the Schedule M-1.
  3. On Line 7 below the Tax-exempt interest field enter a description and the amount of forgiven loan or EIDL advance received.

This will generate an adjustment for the loans Schedule M-1, line 7. 

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