The Paycheck Protection Loan has a Loan Forgiveness feature. During the 8 week period beginning on the date a Paycheck Protection Loan is funded (the Forgiveness Period), a borrower will be eligible for forgiveness and cancellation of indebtedness for up to the full principal amount of the Paycheck Protection Loan. The amount eligible for forgiveness is equal to the total costs incurred and payments made during the Forgiveness Period of 8 weeks for 1) payroll, 2) mortgage interest, 3) rent and 4) utilities.
The cancellation on the debt owed on the Paycheck Protection Loan would also not be taxable. So, you would not report income from the cancellation of this debt. Essentially, with proper planning you can have two and a half months of payroll costs funded by the government and be able to have a tax deduction for the expense (you would have up to 4 interest while the loan is outstanding, but this would also be tax deductible).