Yes, all of these expenses are deductible under the Code.
The legal reasoning behind this conclusion is based on the general principles outlined in § 162 of the Internal Revenue Code, which allows for the deduction of all ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Specifically, § 162(a) includes a reasonable allowance for salaries or other compensation for personal services actually rendered, as well as other business expenses such as traveling expenses and rentals.
The IRS FAQs from 2023 further clarify that the payment of wages, salaries, and benefits to employees is generally deductible as ordinary and necessary business expenses, regardless of whether the Recipient issues Taxpayer Protection Instruments. This aligns with the general rule under § 162(a) that such expenses are deductible.
Moreover, the FAQs indicate that even when a Recipient issues Taxpayer Protection Instruments to the Treasury Department, the use of Payroll Support to pay wages, salaries, and benefits remains deductible. This is consistent with the principle that these payments are ordinary and necessary business expenses under § 162(a).
Therefore, based on the statutory provisions and the IRS's guidance, the expenses for wages, salaries, and benefits paid using Payroll Support are deductible under the Code.
Sources:
§ 162. Trade or business expenses
Paycheck Protection Program Business Expenses
