AB 1577, which would conform to the federal provisions that exclude from taxable income any cancellation of debt income arising from Paycheck Protection Program loan forgiveness, has been sent to the Governor for his signature.
Unfortunately, the bill also specifically prohibits taxpayers from claiming any deduction or credit for expenses paid with the forgiven loans. This means California taxpayers cannot claim any payroll or business deductions for expenses paid with PPP amounts that have been forgiven.
The text of AB 1577 is available at:
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