SECTION 3. TAXPAYERS ELIGIBLE

FOR SAFE HARBOR

Taxpayers who meet the requirements of section 3.01 or 3.02 of this revenue procedure and comply with the requirements of section 4 of this revenue procedure are eligible for the safe harbor procedures provided in sections 4.01 or 4.02 of this revenue procedure, as applicable.

.01 A taxpayer meets the requirements of this section 3.01 if:

(1) The taxpayer paid or incurred eligible expenses in the 2020 taxable year

for which no deduction is permitted because at the end of the 2020 taxable year the taxpayer reasonably expects to receive forgiveness of the covered loan based on those eligible expenses (non-deducted eligible expenses);

(2) The taxpayer submitted before the end of the 2020 taxable year, or as of the end of the 2020 taxable year intends to submit in a subsequent taxable year, an application for covered loan forgiveness to the lender; and

(3) In a subsequent taxable year, the lender notifies the taxpayer that forgiveness of all or part of the covered loan is denied.

.02 A taxpayer meets the requirements of this section 3.02 if:

(1) The taxpayer meets the requirements of section 3.01(1) and (2) of this revenue procedure; and

(2) In a subsequent taxable year, the taxpayer irrevocably decides not to seek forgiveness for some or all of the covered loan. For example, a taxpayer that determines that it will not qualify for covered loan forgiveness and withdraws the application submitted to the lender as described in section 3.01.