Rainflurry
Level 15

FFCRA and CARES Acts including the PPP

When you classify the forgiveness as "non-taxable income", it will be in the equity section of your balance sheet just as if you classify it as "owner's capital".  The difference is that the forgiveness amount will be under "net income", not "owner's capital" which is proper accounting.  PPP loan forgiveness is considered income, as #AirKevin mentioned.