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What is the best way to enter a PPP loan that is forgiven in an Exempt Organization?

KevinLee
Level 1

I have an exempt organization client that received a PPP loan that was forgiven as it covered payroll cost. There is no specific entry info that I can find for entering this into an Exempt Org. return. Does anyone have a good idea? I thought of just putting it to Government contributions, but as it was forgiven I'm not sure that is correct. Thanks in advance for the help.

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7 Replies 7
qbteachmt
Level 15

I would start here, to see what is described:

https://proconnect.intuit.com/community/corporation/help/how-to-enter-forgiven-ppp-loans-in-lacerte/...

 

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KevinLee
Level 1

Started there and it was no help as they do not address Exempt Organizations.

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qbteachmt
Level 15

"it was no help as they do not address Exempt Organizations."

Those references do, however, provide comparative info for how it would be treated. Example:

"Forgiven PPP loans and EIDL grants are considered "Other Tax Exempt Income" for federal purposes"

I don't know if your client entity follows FASB or GAAP or? Filing 990 or 990EZ?

There are lots of references on the web, including tracking the income associated with each period in which you tracked the related expense, if that applies (crosses year ends).

Examples:

https://www.aicpa.org/content/dam/aicpa/interestareas/frc/downloadabledocuments/tqa-sections/tqa-sec...

https://www.untracht.com/news-insights/vantagepoint-newsletter/accounting-for-ppp-loan-forgiveness/

https://claytonmckervey.com/accounting-for-ppp-loan-forgiveness/

https://www.pncpa.com/insights/accounting-for-ppp-loans-forgiveness/

https://www.njcpa.org/article/2021/01/05/3-approaches-for-reporting-ppp-forgiveness-on-financial-sta...

Since there is no Business Code for these funds, I like "Government grants equivalent to contributions" which makes it similar to specific agency grants (SBA administered). That's line 1c.

 

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qbteachmt
Level 15

Ah, look what I just came across: "The IRS – in the 2020 Form 990 instructions – has stated, ‘Amounts of PPP loans that are forgiven may be reported on line 1e as contributions from a governmental unit in the tax year that the amounts are forgiven.’ "

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sjrcpa
Level 15

I'd put it in Misc Revenue - Part VIII Line 11.


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KevinLee
Level 1

Would you enter a second line item removing it as forgiven, or due to the exempt status leave as misc. income without recording the forgiveness?

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sjrcpa
Level 15

I don't think I understand the question re: 2 lines. It's not taxable. just as none of the org's income is taxable (except UBIT). Put it in Column B.


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