This does not work! Now they my QBO is totally messed up I am spending hours trying to resolve. IF YOU ARE GOING TO GIVE ADVISE UNDERSTAND WHAT YOU ARE GIVING ADVISE ON! THIS IS WRONG. There are about 20 different ways explained here and almost every one has a counter claim as to what is correct. IS THERE A PROPER WAY to record a SBA long term liability loan that is currently being paid for by the SBA? (Not PPP or EIDL) a previous loan, years prior to covid.

All you do on the tax return is do am M-1 adjustment for CARES ACT forgiveness income not included in schedule K

i agree, this is the right answer, where on the 1120S do you put this though??

after speaking with SBA yesterday, we can take the interest, etc. off of our taxes and it is not included as income.

Principal pay down by SBA should be reported on 1120 & 1065 Schedule M1 - tax exempt income

You guys are making this too complicated.  Make a journal entry reducing the total principal for those 6 months, and applying it to Member's Equity accounts.

@sunpatel 
Do you mean we should not bother about the interest and the SBA fees paid on behalf of the business, and record only the principal portion?

It would be nice to get an official response from AICPA, therefore I will post the question on my local CPA society because I have a client situation I’m dealing with now about the same issue.

SBA Loan Principal     XX (dr)

Interest Expense         XX (dr)

Other Income-SBA 7(a), 504, or Micro Loan    XX (cr)

For additional resources on sba loans

detailed calculation on sba 7a loans

https://simplifyingcalculation.com/smallbusiness/sba7a-loan

sba504

https://simplifyingcalculation.com/smallbusiness/sba-504-loan-calculator