SECTION 4. SAFE HARBOR

PROCEDURES

A taxpayer described in section 3.01 or 3.02 of this revenue procedure may use the safe harbor procedures provided in section 4.01 or 4.02 of this revenue procedure. .01 Safe harbor for deductions to be claimed in 2020 taxable year . A taxpayer described in section 3.01 or 3.02 of this revenue procedure who satisfies the requirements of section 4.03 and 4.04 of this revenue procedure may deduct non-deducted eligible expenses on the taxpayer’s timely filed, including extensions, original income tax return or information return, as applicable, for the 2020 taxable year, or amended return or AAR under section 6227 of the Code for the 2020 taxable year, as applicable.

.02 Safe harbor for deductions to be claimed in subsequent taxable year . A taxpayer described in section 3.01 or 3.02 of this revenue procedure who satisfies the requirements of section 4.03 and 4.04 of this revenue procedure, may deduct non-deducted eligible expenses on the tax

December 7, 2020 1600 Bulletin No. 2020–50

payer’s timely filed, including extensions, original income tax return or information return, as applicable, for the subsequent taxable year referenced in section 3.01 or 3.02 of this revenue procedure. Taxpayers described in section 3.01 of this revenue procedure may, but do not need to, use this safe harbor to deduct non-deducted eligible expenses in a subsequent taxable year because those taxpayers may deduct the non-deducted eligible expenses in the year that the loan forgiveness is denied under general tax principles, assuming that the taxpayer does not elect to the use the safe harbor in section 4.01 of this revenue procedure.

.03 Limitation on amount of deduction for eligible expenses . A taxpayer applying section 4.01 or 4.02 of this revenue procedure may not deduct an amount of non-deducted eligible expenses in excess of the principal amount of the taxpayer’s covered loan for which forgiveness was denied or will no longer be sought.

.04 Statement . A taxpayer may not apply the safe harbor procedures in section 4.01 or 4.02 of this revenue procedure to deduct any amount of non-deducted eligible expenses unless the taxpayer attaches the statement described in this section 4.04 to the return on which the taxpayer deducts non-deducted eligible expenses. The statement must be titled “Revenue Procedure 2020-51 Statement,” and must include:

(1) The taxpayer’s name, address, and social security number or employer identification number;

(2) A statement specifying whether the taxpayer is an eligible taxpayer under either section 3.01 or section 3.02 of Revenue Procedure 2020-51;

(3) A statement that the taxpayer is applying section 4.01 or section 4.02 of Revenue Procedure 2020-51;

(4) The amount and date of disbursement of the taxpayer’s covered loan;

(5) The total amount of covered loan forgiveness that the taxpayer was denied or decided to no longer seek;

(6) The date the taxpayer was denied or decided to no longer seek covered loan forgiveness; and

(7) The total amount of eligible expenses and non-deducted eligible expenses that are reported on the return.

.05 Additional limitations . Nothing in this revenue procedure precludes the IRS from examining other issues relating to the claimed deductions for non-deducted eligible expenses, including the amount of the deduction and whether the taxpayer has substantiated the deduction claim. It also does not preclude the IRS from requesting additional information or documentation verifying any amounts described in the statement described in section 4.04 of this revenue procedure.