24 Dec 2020
0

No Deduction in California for Expenditures Paid with Forgiven PPP Funds

Roger Rossmeisl, CPA
Small Business Tax Briefs
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)  ...

22 Nov 2020
0

IRS Issues Guidance on Deductibility of PPP Loan-Funded Expenditures

Roger Rossmeisl, CPA
Small Business Tax Briefs
IRS Issues Guidance on Deductibility of PPP Loan-Funded Expenditures

Timing of Non-Deductibility of Forgiven PPP Loan-Funded Expenditures In guidance issued on 11/18/2020, the IRS has made it clear that taxpayers with a "reasonable expectation" that their Paycheck Protection Program (PPP) loan will be forgiven may not deduct expenditures that were paid with the proceeds of those loans, even if the actual forgiveness has not yet been granted prior to the end of the taxable year (Revenue Ruling 2020-27). In this Revenue Ruling, the IRS states that, because the calculation of forgiveness is based on eligible expenses that were paid with PPP funds, the forgiveness of the loan amounts used for these eligible expenses is "reasonably expected to occur", and therefore, under §265, claiming tax deductions for such eligible expenses would be not be appropriate. In a...

08 Aug 2020
0

New FAQs Address PPP Loan Forgiveness Issues

Roger Rossmeisl, CPA
Small Business Tax Briefs
New FAWs Address PPP Loan Forgiveness Issues

The U.S. Small Business Administration (SBA), in consultation with the Department of the Treasury, released guidance on 8/4/2020 answering 23 frequently asked questions (FAQs) regarding the forgiveness of Paycheck Protection Program (PPP) loans. The PPP Loan Forgiveness FAQs, published in a new 10-page document, are divided into the following four sections addressing different aspects of the process and on calculations PPP borrowers should use to determine how much of their loan is forgivable. General Loan Forgiveness FAQs Loan Forgiveness Payroll Costs FAQs Loan Forgiveness Non-Payroll Costs FAQs Loan Forgiveness Reductions FAQs Borrowers and lenders may rely on the guidance provided in this document as SBA’s interpretation, in consultation with the Department of the Treasury, of the CARES Act, the Flexibility Act, and the Paycheck Protection Program Interim...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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