Mich. Won't Tax Forgiven PPP Loans, State Treasury Says

Michigan will follow the federal tax treatment of forgiven Paycheck Protection Program loans and exclude them from an individual or company's tax base and allow a deduction for expenses paid by the loans, the state Department of Treasury said.

The department said in a notice Monday that the state fully conforms to the federal tax treatment for forgiven PPP loans for the purposes of calculating the state's individual and corporate income taxes. The federal government issued the loans under the Coronavirus Aid, Relief and Economic Security Act  and December's Consolidated Appropriations Act .

The department also said that for individual income tax apportionment, the forgiven amount of a PPP loan is included in the denominator of the sales factor and included in the denominator only for borrowers with a commercial domicile in Michigan. The loans are not included in the numerator or the denominator of the sales factor for corporate income tax purposes, but a loan's forgiven portion should be included in a corporation's gross receipts, according to the notice.

--Editing by Neil Cohen.

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