IRS included little specific guidance on the reporting of tax-exempt income from the forgiveness of a PPP loan. Generic instructions are included in the instructions for Form 1040, however tax law is clear that we may not rely on IRS instructions in this format to be reliable. Tax software, so far, and to the extent we’ve seen, has not addressed this issue. It is difficult to imagine a scenario where a PPP loan forgiveness would affect your taxes.
Failing to include this reporting is unlikely to have any effect on acceptance, review, or exam of your tax return. However, we recommend including a separate statement on your tax return:
“This statement is provided under Rev. Procedure 2021-48 Section 3.01(3) regarding tax-exempt income in the amount of $ ___. Forgiveness was granted as of the date the return was filed.”