The PPPEA was enacted on March 30, 2021 and extended the covered period of the PPP from March 31, 2021, through June 30, 2021. California law excludes PPP loans forgiven under the CARES Act from gross income, Telecommunications, Media & Entertainment, Background on federal legislation relating to the PPP, Overview of notable changes under A.B. Wordfence is a security plugin installed on over 4 million WordPress sites. The agreement provides roughly $6 million to support outreach and application assistance to University of California, California State University and California Community College students made newly eligible for CalFresh the state-administered federal program for supplemental food assistance. The 2023 BDO CFO Outlook Survey offers critical insights to support strategic decision-making and help your company thrive. Copyright 2023 BDO USA LLP. 21-17) does not apply to either first- or second-draw loans received after March 31, 2021. The agreement incorporates the Governors Golden State Stimulus plan to assist California households that have borne the disproportionate economic burden of the COVID-19 Recession those with incomes below $30,000, as well as those unfairly excluded from previous federal stimulus payments. NDZkZjRjZDY4ODVjMjk3OGE5MjViODBjYjExOTliZWFhNzgwY2FjMTkzYjll California Largely Conforms to Forgiven PPP Loan Deductibility 1557 generally conforms California to federal law allowing an exclusion from gross income for covered Paycheck Protection Program (PPP) loans that are forgiven as a part of the federal Coronavirus Aid, Relief, and Economic . 18 A.B. This material may not be applicable to, or suitable for, the readers specific circumstances or needs and may require consideration of tax and nontax factors not described herein. 8 CAL. We do not control the destination site and cannot accept any responsibility for its contents, links, or offers. SB 113 also allows the deduction of expenses, basis adjustments, and tax attribution adjustments for qualifying taxpayers for SVO and RRF grants. Paycheck Protection Program Loan Forgiveness and Treatment - California The owner of this site is using Wordfence to manage access to their site. Businesses are struggling. REV. 2020), A.B. 1577 disallows a credit or deduction for Loan Forgiveness Eligible Expenses to the extent of the Forgiven Loan Amount. 20 See A.B. 250 0 obj <>stream YjRjOWE1NzUwNDNiNTkxY2NkYmRhODRjM2M0MzBiOWQwNjYwZjIyNDQ3NTEw Read about the challenges and opportunities that could lie ahead. 2023 Grant Thornton LLP - Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. and CTL purposes. People are having a hard time making ends meet. For tax yearsbeginning in2019,qualifyingtaxpayers cannowexclude PPP loanforgivenessorEIDL grants fromCalifornia gross incomeanddeductallowablecoveredexpenses paid withPPP loan or EIDL grant proceeds. 2020) (available here). California aligning with fed PPP loan treatment | Grant Thornton These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. California conforms to the federal gross receipts test requiring a 25% or greater reduction in gross receipts and will therefore follow the rationale of this related federal guidance. ZTI5MDAwNDczOWI5MWMxY2RlNWVhNzcyY2Q3OWVmNmI2N2Y2ODEyZmM1NTYz We strive to provide a website that is easy to use and understand. California law excludes PPP loans forgiven under the CARES Act from gross income has been saved, California law excludes PPP loans forgiven under the CARES Act from gross income has been removed, An Article Titled California law excludes PPP loans forgiven under the CARES Act from gross income already exists in Saved items. There's more to consider. 13 See I.R.C. Find out how to manage the business risks behind data. Retroactively effectivefor tax years beginning on or after January 1, 2019,AB 80allowsindividuals andbusinesses todeductcoveredexpenses paid for with forgivenPPPloansorEIDLadvances and targeted grantsreceived under theCARES Act and the CAA. Credit: Spidell Tax, Analysis, and Education, 200 West Roseburg Avenue LAW Section 1102 and 1106 of the CARES Act, established the PPP as a new loan program administered by the U.S. Small Business Administration (SBA) as part of its 229 0 obj <>/Filter/FlateDecode/ID[<53445A688FC0F84BB5871A6886EB3172>]/Index[211 40]/Length 93/Prev 93697/Root 212 0 R/Size 251/Type/XRef/W[1 3 1]>>stream Impacted by California's recent winter storms? M2EzM2JjMzhiMzQ0OGJhZjM2Y2YwYzkiLCJzaWduYXR1cmUiOiIzZWNjNmEy SESS., 1 (see new CRTC 17131.8(a)), 2 (see new CRTC 24308.6(a)). 636(a)(37)(A)(iv)(I)(bb). We are excited to finally have clarity on Californias PPP loan forgiveness stance. 1577, 2019-2020 REG. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Y2NjYmFmZTQyOGZhYjViZTYxMTQ0ODRiYWY5OGVkNzNlOWI1NWY0YzU0ZDVl Social login not available on Microsoft Edge browser at this time. The PPPEA was enacted on March 30, 2021 and extended the covered period of the PPP from March 31, 2021, through June 30, 2021. CFOs are more optimistic about the U.S. economy, according to Grant Thorntons 2022 Q4 survey, as they push for growth while being judicious about costs. SESS., 1 (see new CRTC 17131.8(b)), 2 (see new CRTC 24308.6(b)). Private company boards should bring the backgrounds and insights to understand risks and opportunities and drive the business forward. When policy shifts, our insights and analysis can help you plan and respond. Furthermore, to the extent a taxpayer is an ineligible entity, it may be faced with difficult questions regarding how to treat deductions for expenses paid in 2020 that later become disallowed upon loan forgiveness occurring in a different tax year (e.g., the expense occurs in 2020 but becomes disallowed upon PPP loan forgiveness occurring in 2021). 1577, and provides some taxpayer considerations. However, AB 1577 did not allow taxpayers to deduct PPP covered expenses. NWE3NWRjN2NhODFhNjkyOWNiYzZhZWJjN2U5M2FhYjEzNTQ3YTVhMDA5MzNi A sign calling for student loan debt relief is seen in front of the Supreme Court as the justices are scheduled to hear oral arguments in two cases involving President Joe Biden's bid to reinstate . Read about their experiences and a few lessons learned along the way. You can count on us to prioritize and complete work to the best of our ability based on these changes. Yjk1NTlhZjUzMmI3ODFlN2VlZDM3OWQ5OWM1ZDgzYmM3NTgyMWVkZjViZTQy Emergency Financial Relief to Support Community College Students. National Tax Office Leader. Shortly after enactment of the CARES Act, the Internal Revenue Service (IRS) issued Notice 2020-32 providing that deductions for business expenses otherwise allowable under the Internal Revenue Code (IRC) (e.g., deductions under IRC Secs. Our response tackles the human and the economic impacts of COVID in a way that echoes President Bidens American Rescue Plan and will help those who are hurting most. CODE 17131.8(g)(3); 24308.6(g)(3). This content supports Grant Thornton LLPs marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. ODE0ZjA1OTZlMmYzNGViM2E4NWJiYTMwNzQ0N2I2YmVhZTE1MDVlNWJjOTJk At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society. 1577 and how these changes impact their California tax liabilities. & TAX CODE 24271. GTIL refers to Grant Thornton International Ltd (GTIL). Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. 80, some California taxpayers may have either filed their 2020 returns prior to its enactment, or made an extension payment based on the provisions of A.B. What will help even more is using a holistic approach to create a winning strategy. 1 A.B. PDF Forgiven Loan Exclusion Expansion & Modified Conformity to - California The agreement provides $600 in one-time relief to households receiving the California EITC for 2020. This measure is part of Californias effort to recover now that the pandemic is easing, state restrictions are lifting, and businesses are moving back towards full operations. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. Please see www.deloitte.com/about to learn more about our global network of member firms. Golf is better when were all playing together. The compromise builds on the initiatives in the Governors state budget proposal to provide cash relief to lower-income Californians, increase aid to small businesses and provide license renewal fee waivers to businesses impacted by the pandemic. 1577 added new corporate and income tax statutes providing that [a]ny credit or deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which this exclusion is based shall be reduced by the amount of the exclusion allowed under this section.8, A.B. :D 8 Those processing fees gave BofA an incentive to increase the size of PPP loans, according to the small businesses that are suing the $3.05 trillion-asset bank. California: Update to Paycheck Protection Program Loan Conformity This tax treatment would also extend to the Economic Injury Disaster Loans as well. 1 Ch. Now, your competitors are following an automation roadmap to save work and weather economic turbulence. DTTL (also referred to as "Deloitte Global") does not provide services to clients. How to solve business problems and mitigate the risks, Make your transformation deliver on its promise. MTQ4MmJiZjg5ZGY5MWQyZDU2ZmFiZDM1ZmZmZjkyM2E3MDRkYmViZTViM2Yz The undersigned certify that, as of July 1, 2021 the internet website of the Franchise Tax Board is designed, developed and maintained to be in compliance with California Government Code Sections 7405 and 11135, and the Web Content Accessibility Guidelines 2.1, or a subsequent version, as of the date of certification, published by the Web Accessibility Initiative of the World Wide Web Consortium at a minimum Level AA success criteria. The documentation must clearly identify both of the reference quarters (if not using annual comparison), must YjFhOWM4Y2FkNDM3NWJjM2ZmZjE2YmFmNjhlNjc3MDJjM2Q3NjJhMmE1NDgz The agreement also provides $20 million to reengage students who have either left their community college studies because of the pandemic or to engage students at risk of leaving. On April 29, 2021, California Gov. B expects to apply to the lender for forgiveness of the covered loan in 2021. Supreme Court questions Biden student loan debt forgiveness 80, gross receipts from the fourth quarter of 2020 may be compared to the fourth quarter of 2019 only with respect to an application submitted on or after Jan. 1, 2021. See 15 U.S.C. MWFlZjU2ZDU1ZTQzYjZkMGVlNWYwYmRlOWI5MDdmZWZiNGE1OTMwZWRkY2Rj 116-139, the Enhancement Act).8 The federal government also enacted the Paycheck Protection Program Flexibility Act (P.L. & TAX. endstream endobj startxref View the list of archivedMultistate Tax alerts. To be eligible, businesses must have: Employed 50 or less full-time employees Had gross revenue of less than $5 million in 2019 California PPP Update 4.26.2021 : taxpros - reddit Your access to this site was blocked by Wordfence, a security provider, who protects sites from malicious activity. SESS. Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University. How does ESG fit into business strategy? 80 provides much needed guidance clarifying Californias treatment of deductions for expenses paid with forgiven PPP loan proceeds. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. California businesses have been down to the wire this tax season, up against paying state taxes on their Paycheck Protection Program loans. Access from your area has been temporarily limited for security reasons. PPP Forgiveness: Urgent News About Nonconformity in California For additional information on the RRF grants, visit Section 5003 of the ARPA, RTC 17158.2(a), and SBA guidance. L. No. Our NFT Playbook is a roadmap to addressing IP rights, business infrastructure and risk for media & entertainment companies and others. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. You can also read the documentation to learn about Wordfence's blocking tools, or visit wordfence.com to learn more about Wordfence. A.B. 4 CAL. These loans are not forgivable. This Google translation feature, provided on the Franchise Tax Board (FTB) website, is for general information only. 162 and 163) will be disallowed to the extent PPP loan proceeds are ultimately forgiven.5 Later in 2020, the IRS issued Revenue Ruling 2020-27 further explaining that taxpayers cannot deduct expenses paid with PPP loan proceeds if the taxpayer reasonably expects forgiveness of the covered loan regardless of the year when forgiveness occurs. %PDF-1.6 % OTFhMGFmZGQ0YThjYTRlMDNjYWE5NDNlMmI2NjY2ZTFiYTdmNzc0NGFjM2Zj