Legislation has been introduced (AB 281) that declares the intent to conform California law to the federal law allowing the deduction of expenses paid with forgiven PPP debt. The author of the bill is Assemblywoman Autumn Burke, the chair of the Assembly Revenue and Taxation Committee. She is also the author of last year’s bill AB 1577 (Ch. 19-39), which excluded from taxable income any cancellation of debt income arising from PPP loan forgiveness, but required that deductions for expenses paid with the PPP loan forgiveness amount be reduced.
If you and your clients would like to see this bill enacted, please contact your legislators to let them know your opinion and urge them to pass this bill as soon as possible.
To find your California representative, go to:
Taxpayers with PPP loan forgiveness should consider putting their California returns on extension until we know whether any conformity legislation is enacted.
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