2020-71: California says no deduction for expenses paid with forgiven PPP funds - Spidell

2020-71: California says no deduction for expenses paid with forgiven PPP funds


In anticipation of the new federal stimulus package, we want to let you know that California law specifically requires PPP loan forgiveness to reduce deductions. California does not conform to this federal law, which is amended as part of the stimulus package. Taxpayers will still be required to reduce their deductions on the California return because California enacted AB 1577 (Ch. 20-39), which specifically prohibits taxpayers from claiming any deductions or credits for expenses that are paid with forgiven PPP loan amounts.

So when tax planning, reduce business expenses by the amount of the PPP loan forgiveness on the California return.

Spidell Publishing will be closed from 5 p.m. tonight, December 23, until 7 a.m. Monday, December 28. Happy holidays!

Sign up for Spidell’s Flash E-mail — Get breaking news delivered to your inbox, plus other free analysis and information for tax professionals. Join our community and stay at the top of your game. Click here to sign up.