PPP forgiveness: One step closer for California businesses - Spidell

PPP forgiveness: One step closer for California businesses


Governor Gavin Newsom, Senate President pro tempore Toni G. Atkins, and Assembly Speaker Anthony Rendon announced that they have reached an agreement on a package of immediate actions that will speed needed relief to individuals, families, and businesses suffering the most significant economic hardship from the COVID-19 recession.

Included in the agreement is partial conformity to new federal tax treatment for loans provided through the Paycheck Protection Program, allowing companies to deduct up to $150,000 in expenses covered by the PPP loan. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. Firms that took out higher loans would still be subject to the same ceiling of $150,000 in deductibility. This tax treatment would also extend to the Economic Injury Disaster Loans as well.

The proposal also includes stimulus payments to individuals, fee waivers for bars and restaurants, and continued grants of up to $25,000 for California businesses.

Do not start filing returns and excluding up to $150,000 from clients’ PPP loan forgiveness, as this is not law yet.

There are bills that contain language about conformity but there are no bills that address all the information in the press release.

We will let you know when the law passes and what it actually says.

For a copy of the Governor’s press release go to:

www.gov.ca.gov/2021/02/17/governor-newsom-legislative-leaders-announce-immediate-action-agreement-for-relief-to-californians-experiencing-pandemic-hardship/

Attend Spidell’s Plan While Preparing Tax Returns webinar on February 26 and find out how to reduce your clients’ tax bills by planning for this year’s tax changes. Click here for details.