2021-44: FTB provides additional AB 80 guidance - Spidell

2021-44: FTB provides additional AB 80 guidance


The FTB has updated its Paycheck Protection Program (PPP) loan forgiveness webpage and released FAQs that provide much awaited guidance concerning AB 80 and how it is being applied. This guidance confirms what we at Spidell have been reporting:

  • The FTB will follow the SBA guidance regarding how to determine whether the 25% gross receipts threshold is met. This means taxpayers may compare any calendar quarter in 2020 to the comparable calendar quarter in 2019 (or total 2020 gross receipts to total 2019 gross receipts);
  • Taxpayers do not have to provide documentation or certification if they meet the 25% gross receipts threshold, they may simply deduct all expenses paid with PPP forgiven loan amounts;
  • Multistate taxpayers should use total gross receipts (not just California-source gross receipts) to determine whether the 25% gross receipts threshold is met; and
  • For taxpayers who do not meet the 25% gross receipts decline threshold, the disallowance of deductions must be reported on the tax return for the taxable year in which they reasonably expect the PPP loan will be forgiven. This would mean deductions must be reduced on the 2020 return if in 2020 the taxpayer reasonably expected that the PPP loan would be forgiven in 2021. (See Rev. Rul. 2020-27)

In other news, the FTB announced that the system glitch that was preventing them from sending courtesy e-mails to tax professionals when the FTB sent notices to taxpayers has been resolved and these e-mails are now being sent.

The FTB’s updated webpage regarding PPP loan forgiveness is at:

www.ftb.ca.gov/about-ftb/newsroom/covid-19/paycheck-protection-program-loan-forgiveness.html

The FAQs for Paycheck Protection Program is available at:

www.ftb.ca.gov/about-ftb/newsroom/covid-19/faqs-for-paycheck-protection-program.html

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