No Deduction in California for Expenditures Paid with Forgiven PPP Funds
With the prospect that ordinarily tax deductible business expenses will still be deductible if they were paid for with forgiven PPP loan funds contained in the Coronavirus Response and Relief Supplemental Appropriations Act, 2021, attention turns to the California treatment of same.
The answer is that California currently does not conform to the federal amendment to this law contained in the new stimulus bill. As such, business expenditures paid for with forgiven PPP loan funds must be reversed for California tax purposes.
The source of this position is California AB 1577 which states that any deductions for expenses paid with forgiven PPP loan funds are specifically non-deductible.
(This is Blog Post #943)
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About the Author: Roger Rossmeisl, CPA
Roger Rossmeisl, CPA, brings over 40 years of experience helping small business owners who have outgrown their current CPA firm and larger companies seeking responsive, cost-effective solutions they’re not receiving from their current CPA Firm. He goes beyond tax compliance, explaining the “why” behind the numbers and their impact on cash flow and other decision making.
An avid follower of federal monetary policy, Roger adds insight into how government actions affect business and wealth. With a niche in franchised new vehicle dealerships, he has served over 100 franchise stores and groups through decades of evolving IRS rules and legislation.
