From: Cootsona, Lizzie <Lizzie.Cootsona@asm.ca.gov>
Sent: Thursday, April 8, 2021 9:06 AM
To: Neil Silverstein <email@example.com>
Subject: PPP Loan Forgiveness Update
Thank you for reaching out to our office in regard to California conforming to PPP loan forgiveness.
As you may know, the state’s lawyers have been waiting on additional guidance from the federal government regarding a provision that banned state tax cuts and deductions upon receiving the American Rescue Plan funds.
The IRS and the Treasury have announced yesterday that states can conform to recent federal tax benefits (such as the allowance of deductions for amounts paid with forgiven PPP debt) and still benefit from the federal funding provided to states through the American Rescue Plan Act (ARPA). This eliminates the concern about whether California would lose federal ARPA funding if California enacts AB 80, which would allow taxpayers to deduct up to $150,000 in expenses paid with forgiven PPP debt.