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Loans as Taxable Income


My firm received an EIDL loan from the SBA due to Covid. I’m wondering:
a.) Does that money get marked as part of gross profit and/or income on our books?
b.) Does the money we got from the loan count as taxable income?
c.) Does that tax responsibility get passed to my partner and I (we are taxed as a partnership federally and in the MD and DC localities).


in progress 1 Answer


  1. 74 Answers

    Hi in most cases there were two parts to the EIDL loan. If you received two deposits the first deposit being between $1,000 – $10,000 and the second the balance of the loan, the first deposit is a grant. The grant does not have to be paid back and should be recorded as “Other Income”. The grant portion of the EIDL will be counted as income and will pass through to you and your partner on your schedule K1. This will be taxable. The balance should be recorded as a long-term liability on your balance sheet. This will not be counted as income and will not pass through to you or your partner as income. This amount is expected to be paid back over a 30 year period at a fixed interest rate. When you start to make payments on the loan you will be able to record the interest as an expense (to reduce net income) and the principle balance on the loan will be reduced.

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