PPP Loans - California - Spidell

PPP Loans – California

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Message Board PPP Loans – California

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    • #296478
      Anonymous
      Participant

      The California issue of not knowing what to do with PPP loans and reporting them on the tax return is really creating a backlog.  Has anyone thought of either 1.) filing the tax return with the California portion of the PPP loan being taxable or 2.) keeping the PPP loan on the balance sheet for California only?  Of course, reporting it as taxable in 2020 and if it becomes non-taxable would we have to amend 2020 or pick up the expenses in 2021.  I suppose that is why I thought keeping it on the balance sheet for California might be better.  Waiting until June or later creates such problems.  Any guidance ???

    • #296494
      Anonymous

      The loan is nontaxable for California. The issue is whether the expenses are deductible. Current law would be you have to reduce your expenses for California whether you keep loan on books or not. See below from FTB website.

      The Consolidated Appropriations Act, 2021 was signed into federal law on December 27, 2020, allowing deductions for eligible expenses paid for with covered loan amounts that would be or would reasonably be expected to be forgiven under the PPP. California law does not conform to this federal provision. For California purposes, any credit or deduction allowed for any amount paid or incurred should be reduced by the amount of the exclusion allowed under the PPP. For more information, see Schedule CA (540) specific line instructions.

      The Franchise Tax Board will be monitoring state legislation for any changes to this Act, but at this time, no bill has been introduced that addresses this topic.

    • #296497
      Patrick Howard
      Participant

      I called my state Legislator this morning followed by my state Senator.  Let them know I am not happy about this.

      We could file federal, hold CA and progress bill.  I am thinking of doing that.

    • #297901
      SFFDIB
      Participant

      California Senator Andreas Borgeas 8th Senate District introduced Senate Bill 265 (SB 265) to ensure California businesses don’t pay taxes on PPP loans. The state of California has collected $14.3 billion in unanticipated revenue; there is no need to penalize California’s job creators with a tax. Contact him in support of his bill.

    • #298047
      Anonymous

      I wonder why Spidell has not mentioned this Senate Bill 265…I just looked it up. Like you said it would conform CA law to Federal law. Looks like it stalled on March 18 after the last federal tax bill passed. Seems like the Feds should be able to tell us if our Federal funding will be affected by passage of this Bill by now! This is insanity!

    • #298048
      Sandy Weiner
      Participant

      We’ve heard AB 80, which currently would allow up to $150,000 of expenses paid with PPP forgiven loan amounts, is the bill most likely to pass.  That’s why we’ve been focusing on that bill.   It looks as though Treasury is giving a green light to states to pass ARPA  conformity (or partial conformity) legislation so we are hoping there will be movement on AB 80 shortly.  We will send out a flash email as soon as any PPP expense deduction conformity legislation passes.

    • #298053
      Patrick Howard
      Participant

      Andreas Borgeas is a Republican, so I am guessing SB 265 is DOA.  Fed up with California for sure.  I have 125 S Corporations and Partnerships on extension and many related 1040’s.

      Pure nonsense, we are running out of time.

    • #298146
      Anonymous

      GOOD NEWS!!!

      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.
      The full text of the Treasury guidance can be found at: https://home.treasury.gov/news/press-releases/jy0113

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