IRS Guidance Says No Deduction is Allowed for Business Expenses Paid with Forgiven PPP Loans [Updated October 7, 2020] [open pdf - 665KB]
From the Document: "The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136) created Small Business Administration (SBA) Paycheck Protection Program (PPP) loans that can be used to cover payroll expenses and certain operating costs and can be forgiven if the borrower meets certain criteria. On April 30, 2020, IRS [Internal Revenue Service] issued Notice 2020-32, stating that PPP-recipients cannot claim a deduction for expenses funded from the forgiven PPP loans."
CRS Insight, IN11378
Congressional Research Service: https://crsreports.congress.gov/