The Paycheck Protection Program (PPP) is a loan at first that becomes a grant if certain requirements are met.
To the extent the loans are forgiven under the CARES Act, the amounts are not included in gross income and are not taxable.
IRS Notice 2020-32 provides that the business expenses paid with the loan-grant money are not deductible for federal tax purposes. Because the PPP is a loan-grant and not a credit, 15-30-2110(4), MCA, does not apply and the business expenses offset by the grant are not deductible for Montana tax purposes either.