By
Maeda Palius
on Dec 08, 2021 at 08:41 PM in
Tax Alerts from CCH
To Our Valued Clients and Friends,
In April 2021, we communicated regarding changes to California conformity as it applied to Federal loan forgiveness treatment on PPP loans. We interpreted that the new California guidance applied to both first and second round PPP loans as covered loans, and therefore they were both eligible for favorable tax treatment.
WHAT HAS CHANGED?
A recent update to the California Franchise Tax Board website indicates that California's law does NOT conform to the Federal Paycheck Protection Program Extension Act that extended the covered period of the PPP. As such, the law does not allow for an exclusion from income for PPP loans received after March 31, 2021.
WHAT DOES THIS MEAN?
If you received either a first or second round PPP loan after March 31, 2021, the forgiveness of that loan will be taxable on your California income tax return. Depending on the size of the loan, you may need to pay additional amounts for your 2021 California estimated taxes to account for this income increase.
If you have any questions or concerns, please do not hesitate to contact us.
Wishing You a Happy and Healthy Holiday
Maeda Palius, Jason Janzen, Annika Jensen and the POJ Team
