CA PPP Forgiveness - Spidell

CA PPP Forgiveness

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Message Board CA PPP Forgiveness

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    • #317084
      Catherine M. March CPA
      Participant

      New s corporation purchase the assets of an existing business in November 2019. They received a PPP loan in 2020 for $150,000 which has been forgiven.  But for CA their ownership of this business did not exist from January 2019 to November 2019.

       

      Can they get the gross receipts from the old owners to use for comparative purposes for 2019 income  to compare to their 2020 gross receipts so their PPP loan is not includable in income for 2020.

      Are they any other alternatives for this new owner.

    • #317141
      Lynn Freer
      Participant

      From the California Taxletter

      The FTB will follow the SBA’s guidance regarding gross receipts calculations, and which periods taxpayers must use to measure the reduction in gross receipts:

      • Taxpayers may compare any quarter in 2020 to the comparable quarter in 2019. Alternatively, they can compare the gross receipts from calendar-year 2020 to the gross receipts from calendar-year 2019;
      • For entities not in business during the first and second quarters of 2019 but in operation during the third and fourth quarters of 2019, taxpayers must demonstrate that gross receipts in any quarter of 2020 were at least 25% lower than during either the third or fourth quarters of 2019;
      • For entities not in business during the first, second, and third quarters of 2019 but in operation during the fourth quarter of 2019, taxpayers must demonstrate that gross receipts in any quarter of 2020 were at least 25% lower than the fourth quarter of 2019; and
      • For entities not in business during 2019 but in operation on February 15, 2020, taxpayers must demonstrate that gross receipts in the second, third, or fourth quarter of 2020 were at least 25% lower than the first quarter of 2020.
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