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YjFhOWM4Y2FkNDM3NWJjM2ZmZjE2YmFmNjhlNjc3MDJjM2Q3NjJhMmE1NDgz Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. Spidell Publishing one of Californias leading continuing education organizations is reporting that the PPP loan forgiveness exclusion enacted by AB 80 (Ch. Additional Aid for Individuals and Families. NDEyZDM0YmQ2MzdjM2I1OTg1YmYxMTdhYzE2OWE5MWEyMjJkYTM5ZTg4ZjYw All Rights Reserved. hVkkF+qe6 Al+vji"3{gYiSZ2e):t z$/=N,zG&F0ihH&h jucN^#VBOZ.fY+n?1o%?}j-]drM5~j?oZQ~|f)?gV~R,.jz2,QzOu"JY[#M}K3_OO^6b^,#lYu7O. This tax treatment would also extend to the Economic Injury Disaster Loans as well. MTQ4MmJiZjg5ZGY5MWQyZDU2ZmFiZDM1ZmZmZjkyM2E3MDRkYmViZTViM2Yz By: Pedro T. Rincon, CVA, Partner Osborne Rincon CPAs. OTFhMGFmZGQ0YThjYTRlMDNjYWE5NDNlMmI2NjY2ZTFiYTdmNzc0NGFjM2Zj 1577, 1, 2; CALIFORNIA ASSEMBLY FLOOR ANALYSIS, AUG. 29, 2020, INCOME TAXES: FEDERAL CARES ACT: GROSS INCOME: LOAN FORGIVENESS, JULY 8, 2020, Deloitte Heads Up, Volume 27, Issue 8, Highlights of the CARES Act, updated September 18, 2020, Deloitte Tax LLP's Multistate Tax practice, California legislature allows certain non- This material may not be applicable to, or suitable for, the readers specific circumstances or needs and may require consideration of tax and nontax factors not described herein. YjRjOWE1NzUwNDNiNTkxY2NkYmRhODRjM2M0MzBiOWQwNjYwZjIyNDQ3NTEw If you think you have been blocked in error, contact the owner of this site for assistance. Tax laws are ever-changing, which is why you need proficient tax professionals working with you and your business to ensure you are in compliance with the current tax laws. 16 See I.R.S. A.B. MmU1MjhmZWM1MzQxMzcyYmQyMmE2NGRlNTRlOGU3NDgxZjAyMDVlYmY2Mjk2 On September 9, 2020, Californias Governor Newsom signed Assembly Bill 1577 (A.B. The authors of this alert would like to acknowledge the contributions of Lauren Kim to the drafting process. 1577, A.B. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. 229 0 obj <>/Filter/FlateDecode/ID[<53445A688FC0F84BB5871A6886EB3172>]/Index[211 40]/Length 93/Prev 93697/Root 212 0 R/Size 251/Type/XRef/W[1 3 1]>>stream SESS. On April 29, 2021 Governor Newsom signed California A.B. Connecting with our core purpose through a renewed lens. endstream endobj startxref 5 IRC Sec. Onlyagross receiptsreduction inone quarterin2020mustmeet this25%thresholdtoqualifyforthe PPP loan expense deduction, assuming the entity is notpublicly traded. As a result, it provided no California tax relief for fiscal year taxpayers whose tax year began before January 1, 2020, but who obtained a PPP loan after January 1, 2020. 311 0 obj <>stream Rather than deny deductions for expenses paid with forgiven PPP loan proceeds as A.B. Furthermore, to the extent a taxpayer is an ineligible entity, it may be faced with difficult questions regarding how to treat deductions for expenses paid in 2020 that later become disallowed upon loan forgiveness occurring in a different tax year (e.g., the expense occurs in 2020 but becomes disallowed upon PPP loan forgiveness occurring in 2021). For this reason, taxpayers that have already filed or paid tax following the provisions of A.B. 116-260. Read about their experiences and a few lessons learned along the way. 4 CAL. By showing up as I am, Im elevating my career. SBA Forgiveness Portal. The agreement also partially conforms California tax law to new federal tax treatment for loans provided through the Paycheck Protection Plan, allowing companies to deduct up to $150,000 in expenses covered by the PPP loan. & TAX CODE 24271. The agreement broadens this initial plan and now provides direct relief to more lower-income Californians through a $600 one-time grant to households enrolled in the CalWORKS program and recipients of SSI/SSP and Cash Assistance Program for Immigrants (CAPI). %PDF-1.7 % 116-136. Cybersecurity can never rest. -----BEGIN REPORT----- & TAX. hb```b``V``e``[ ,@QR40 Mjy{zf9sUnhRn(=vl&G99I\@V7?$vt0Ft 0AU:\l0 c`\=H$X$BCA~'YlxH/t>x On April 29, 2021, AB 80 (Consolidated Appropriations Act (CAA) Conformity) was enacted which allowed the additional income exclusion for second draw PPP loans and Economic Injury Disaster Loan (EIDL) advance grants and allowed the deduction of expenses, basis adjustments, and tax attribution adjustments for qualifying taxpayers, for tax years beginning on or after January 1, 2019. section 1106 of the CARES Act for forgiveness of the covered loan. In September 2020, California enacted AB 1577, which conformed to the CARES Act exclusion from gross income for PPP loan forgiveness. 0 Our NFT Playbook is a roadmap to addressing IP rights, business infrastructure and risk for media & entertainment companies and others. MjhlMTk5ZGY1MzFiNTZlYzQ5N2ZlMTAyOGIwYzZhZDAwOGU4ZDQ5N2U4Nzlj California law excludes PPP loans forgiven under the CARES Act from gross income has been saved, California law excludes PPP loans forgiven under the CARES Act from gross income has been removed, An Article Titled California law excludes PPP loans forgiven under the CARES Act from gross income already exists in Saved items. YjNiOTAxNmNjNzdiZTlhZGIxNjNmYmViOWVmYThmZWI3YTRmMzM0ZmZiNjBj ZGU2YzllYThlZmU0NDllMTQxZDgyMWZmZWNlNGNkNjliYzNkMjQyNTQ1YWFj 80. 80, gross receipts from the fourth quarter of 2020 may be compared to the fourth quarter of 2019 only with respect to an application submitted on or after Jan. 1, 2021. See 15 U.S.C. To qualify for expense deductions, basis adjustments, and lack of reduction of tax attributes related to AB 80, you must meet the following qualifications. Find out how the technology, banking and asset management sectors are adapting their strategies to handle todays threats. Under the express terms of the CARES Act, forgiven loan amounts are excluded from the borrowers gross income.4 80's treatment of expenses paid with forgiven loan proceeds A.B. 116-136. National Tax Office Leader. You meet the 25% gross receipts reduction qualifications. Learn how were making the game more inclusive for all. A.B. Scott Smith, State & Local Tax, National Technical Practice Leader, Business Restructuring & Turnaround Services, Total Tax Transparency & ESG Tax Strategy, Financial Institutions & Specialty Finance, California: Update to Paycheck Protection Program Loan Conformity, Do Not Sell My Personal Information as to BDO Investigative Due Diligence. Digs with Dignity is on a mission to provide those transitioning from homelessness with custom, fully furnished living spaces that feel like home. How we work matters as much as what we do. YWFjZWQ2YzBhMWI1ZWY2ZDgwYmYxYzVmNDY5OTYxYTNkOTUyMTJlNzk0YTZk Y2NjYmFmZTQyOGZhYjViZTYxMTQ0ODRiYWY5OGVkNzNlOWI1NWY0YzU0ZDVl 17 A.B. 2 A.B. 116-136, 1105(i). SESS. In addition, the agreement provides a $600 one-time payment to taxpayers with Individual Tax Identification Numbers (ITINs) who were precluded from receiving the $1,200 per person federal payments issues last spring and the more recent $600 federal payments. On September 9, 2020, Assembly Bill (AB) 1577 (Coronavirus Aid, Relief, and Economic Security (CARES) Act Conformity) was enacted which allowed an income exclusion for tax years beginning on or after January 1, 2020, for forgiven PPP loans. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Private company boards should bring the backgrounds and insights to understand risks and opportunities and drive the business forward. Notice 2020-32 (available here). CODE 17131.8(g)(3); 24308.6(g)(3). NDQyOTJlYTVmOTZkMzNjMTFiNDZlY2VjNjdlMmViOTViNWVlZmRkMzIyZWNl Podcast: Should borrowers submit PPP loan forgiveness applications early? DTTL and each of its member firms are legally separate and independent entities. GTIL refers to Grant Thornton International Ltd (GTIL). 162 and 163) will be disallowed to the extent PPP loan proceeds are ultimately forgiven.5 Later in 2020, the IRS issued Revenue Ruling 2020-27 further explaining that taxpayers cannot deduct expenses paid with PPP loan proceeds if the taxpayer reasonably expects forgiveness of the covered loan regardless of the year when forgiveness occurs. You can count on us to prioritize and complete work to the best of our ability based on these changes. ~A=.d XmtLY RLqg! U You meet the 25% gross receipts reduction qualifications. For forms and publications, visit the Forms and Publications search tool. 1577 and how these changes impact their California tax liabilities. Y2VmMzUxZjkwZWU4YmYxYWRhYTJlNWMyOTM4MTQ2NGI4MThhNDBmOGNjNmY3 In its May 2021 online issueofFTBTax News,the FTB also instructedtaxpayersthat forgiven PPP loansshould notbeincludedas gross receiptswhen calculating CaliforniasLLCfeeand tax. You can count on us to prioritize and complete work to the best of our ability based on these changes. We understand you. 10 CAL. 211 0 obj <> endobj Any differences created in the translation are not binding on the FTB and have no legal effect for compliance or enforcement purposes. SESS., 1 (see new CRTC 17131.8(a)), 2 (see new CRTC 24308.6(a)). 1557 generally conforms California to federal law allowing an exclusion from gross income for covered Paycheck Protection Program (PPP) loans that are forgiven as a part of the federal Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). Due to the timing of A.B. REV. 276 0 obj <> endobj Our response tackles the human and the economic impacts of COVID in a way that echoes President Bidens American Rescue Plan and will help those who are hurting most. California Rebuilding Fund Small businesses may be eligible for a loan up to $100,000 from the California Rebuilding Fund. April 29, 2021 Governor Gavin Newsom has signed Assembly Bill 80, to amend the law. A sign calling for student loan debt relief is seen in front of the Supreme Court as the justices are scheduled to hear oral arguments in two cases involving President Joe Biden's bid to reinstate . ODE0ZjA1OTZlMmYzNGViM2E4NWJiYTMwNzQ0N2I2YmVhZTE1MDVlNWJjOTJk It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. REV. On June 30, 2022, AB 194 was enacted which allowed an income exclusion for covered loan amounts forgiven pursuant to the Paycheck Protection Program Extension Act of 2021 (PPPEA) (Public Law 117-6). 1 A.B. ZmU1YzEwNzA1MTAyYzc0ODZiODFlZjZkNTUzYmQ2YzFmNmVlOTA2M2JlM2Y3 1577, 1, 2; CALIFORNIA ASSEMBLY FLOOR ANALYSIS, AUG. 29, 2020 (available here); see also Coronavirus Aid, Relief, and Economic Security Act, Pub. ZTI5MDAwNDczOWI5MWMxY2RlNWVhNzcyY2Q3OWVmNmI2N2Y2ODEyZmM1NTYz We are excited to finally have clarity on California's PPP loan forgiveness stance. 18 A.B. 116-139, the Enhancement Act).8 The federal government also enacted the Paycheck Protection Program Flexibility Act (P.L. 15 See e.g., I.R.C. California conforms to the federal gross receipts test requiring a 25% or greater reduction in gross receipts and will therefore follow the rationale of this related federal guidance. Be ready to demonstrate diligence for the FCPA. California law excludes PPP loans forgiven under the CARES Act from gross income, Telecommunications, Media & Entertainment, Background on federal legislation relating to the PPP, Overview of notable changes under A.B. (CAL. AB 80 conformity only applies to the exclusion from income for PPP loan forgiveness and EIDL advance grants. 1 Ch. This Tax alert provides a brief overview of the federal legislation relating to the PPP, summarizes the notable changes to California law made by A.B. He has 22 years of broad-based SALT consulting experience at the national and practice office levels in large public accounting firms. Generated by Wordfence at Sat, 4 Mar 2023 17:56:41 GMT.Your computer's time: document.write(new Date().toUTCString());. People are hungry and hurting, and businesses our communities have loved for decades are at risk of closing their doors. 80, largely conforming to Federal rules relating to deductibility of expenses paid with funds from forgiven Paycheck Protection Program. 13 See I.R.C. Dana is based in San Jose, California. The PPPEA was enacted on March 30, 2021 and extended the covered period of the PPP from March 31, 2021, through June 30, 2021. A medical researcher accelerated purchases by 45% with a new tech implementation plan. Banks face new challenges on regulation, ESG, mortgages, digital assets, audit, tax or digital transformation in 2022. 1577, 2019-2020 REG. All rights reserved. The agreement also partially conforms California tax law to new federal tax treatment for loans provided through the Paycheck Protection Plan, allowing companies to deduct up to $150,000 in expenses covered by the PPP loan. 80), Laws 2021. CODE 17131.8(b); 24308.6(b), as amended by A.B. The information contained herein is general in nature and is based on authorities that are subject to change. Modesto, CA 95350, (209) 527-4220 (phone) Read about the challenges and opportunities that could lie ahead. California's partial PPP conformity bill sent to Governor (04-26-21) The California General Assembly has sent AB 80 to the Governor, and he is expected to sign it. ZjM5OWM1NmRhZmIzYzYxY2VlZmY4NDExYjhjMDA0YmRlOThjMjBhYjk3Nzkz Grant payments for CalWORKS households are expected by mid-April; timing for the delivery of SSI/SSP and CAPI grants is currently under discussion with federal officials. More than 750,000 PPP loans were taken out by California small businesses. 80, California Assembly, April 15, 2021. 17 (A.B. Please see www.deloitte.com/about to learn more about our global network of member firms. Ataxpayercannot combinetwo or more2020quarterly losses to arrive at thisthreshold. Forms, publications, and all applications, such as your MyFTB account, cannot be translated using this Google translation application tool. NThmOTI5NTJhNjc1MTk0MWYwNDRhODc5Yjk0NWRlY2MxOGViMzcwMTViODJl Jamie Yesnowitz, principal serving as the State and Local Tax (SALT) leader within Grant Thornton's Washington National Tax Office, is a national technical resource for Grant Thornton's SALT practice. If your PPP amount is over $150, 000 and you received your PPP loan through a bank in the SmartBiz network, your bank will be contacting you directly about applying for Forgiveness. When addressing the new expectations of your workforce, speed is a key factor. 4 See P.L. Impacted by California's recent winter storms? ODU0M2JiMTQ1YmRhYjQ5Yjc2ZWQzNTA3Mjc4MDM1OWI3N2RmYmE4YjEzZTI3 MzZiNmY3MzJiY2FhODEyYjI2YzU5MzE4ZWE1NTYxNjAxZmVkNTg1ZjYyYzVh Combined, the agreement represents a total of 5.7 million payments to low-income Californians. MGI4ODNkMGY5N2YxNzFmNjdlOWM5ZDYzNjFiMDIzZmZmMTNlMWUzMTg2NWEy (CAL. Report any allowable deductions on your original return. Now, your competitors are following an automation roadmap to save work and weather economic turbulence. Partner, State and Local Tax West Region Leader. 80 provides much needed guidance clarifying Californias treatment of deductions for expenses paid with forgiven PPP loan proceeds. CODE 17131.8(g)(3)(B); 24308.6(g)(3)(B). NTU5M2RhOWQwZTM1ZWU5NWE0YmI3YmJjZjMyYWI4M2IxYzcyNDVkMjY1MDc0 Answer: For a Second Draw PPP Loan amount of $150,000 or less, the borrower must provide documentation substantiating the reduction in gross receipts before or at the time the borrower seeks loan forgiveness (or upon SBA request). Sign up to receive the latest BDO news and insights. Friday, September 25th, 2020. 102-1125) on February 3, 2023, that makes significant enhancements to a variety of Illinois credit and incentive programs. Taxpayers that have received PPP loans should consult with their California tax advisors regarding the changes made by A.B. 1577, addressing the treatment of PPP loans for tax years beginning on and after Jan. 1, 2020.7 Consistent with IRS Notice 2020-32, this legislation generally provided that forgiven PPP loan amounts would be excluded from the borrowers gross income, but that associated deductions would not be allowed for expenses paid with forgiven PPP loans. 0 1 A.B. The Multistate Tax alert archive includes external tax alerts issued byDeloitte Tax LLP's Multistate Tax practiceduring the last three years. However, AB 1577 did not allow taxpayers to deduct PPP covered expenses. The path to quality loyalty programs begins with adopting the right analytics looking deeper into customer purchase patterns to uncover true trends. 13 Specifically, A.B. If you make an election under Rev. In response to the IRSs guidance, Congress enacted the Consolidated Appropriations Act, 2021 (CAA) on Dec. 27, 2020, to allow greater deductibility of expenses paid with forgiven PPP loan proceeds.6 This federal response more broadly allows for the deductibility of expenses paid with forgiven PPP loan proceeds. Section 636(a)(37)(A)(iv)(bb), which requires the entity tohave experienced at least a 25% drop in gross receiptsinthe first, second or thirdquarter of 2020, or the fourth quarter if a PPP loan application was submitted on or after January 1, 2021,compared tothe same quarter in 2019. According to the legislative analysis, this date was changed to ensure that all fiscal year filers are captured. Unable to verify your submitted forgiveness amount and/or documents or 2.) 200 West Roseburg Avenue Modesto, CA 95350 (209) 527-4220 (phone) (209) 527-4247 (fax) https . 80 has been satisfied to avoid being classified as an ineligible entity.. Find out how to manage the business risks behind data. Our goal is to provide a good web experience for all visitors. & TAX CODE 24344; 24344.5; 24344.7. Your access to this site was blocked by Wordfence, a security provider, who protects sites from malicious activity. This content supports Grant Thornton LLPs marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. 250 0 obj <>stream When policy shifts, our insights and analysis can help you plan and respond. There's more to consider. %PDF-1.6 % For taxpayers other than ineligible entities, A.B. 636(a)(37)(A)(iv)(I)(bb). YjA1NTM0ZGYzOWRkOTM0Yjg0MTQ3Mzc5MzhlNzQ1Y2UwOTA0Y2ZlODFkZjdi Larger firms that took out higher loans would still be subject to the same ceiling of $150,000 in deductibility. California businesses have been down to the wire this tax season, up against paying state taxes on their Paycheck Protection Program loans. People are having a hard time making ends meet. COVID-19 has caused PE firms to adjust their valuation practices postponing valuations to avoid reset triggers, exploring new approaches to valuations or diversifying existing ones. Don't let tax be the only deciding factor in your relocation. Sec. In addition to these measures, the agreement provides tax relief for businesses, commits additional resources for critical child care services and funds emergency financial aid for community college students. 2 Under the Consolidated Appropriations Act, 2021, as referenced in A.B. Dana Lance is the Tax Practice Leader for the Greater Bay Area and the SALT Practice Leader for the West Region. It is unclearhowbusinesses that changed entity types during 2020will apply2019 gross receiptstoqualify for the PPPexpense deduction. Social login not available on Microsoft Edge browser at this time. If you have questions regarding A.B. hbbd``b`?`\@ "$@b Bq@S my S{.$4VP&F% 1FrO G LAW Section 1102 and 1106 of the CARES Act, established the PPP as a new loan program administered by the U.S. Small Business Administration (SBA) as part of its The agreement provides roughly $6 million to support outreach and application assistance to University of California, California State University and California Community College students made newly eligible for CalFresh the state-administered federal program for supplemental food assistance. 3 P.L. Retroactively effectivefor tax years beginning on or after January 1, 2019,AB 80allowsindividuals andbusinesses todeductcoveredexpenses paid for with forgivenPPPloansorEIDLadvances and targeted grantsreceived under theCARES Act and the CAA. 20 See A.B. We cannot guarantee the accuracy of this translation and shall not be liable for any inaccurate information or changes in the page layout resulting from the translation application tool. %%EOF Those processing fees gave BofA an incentive to increase the size of PPP loans, according to the small businesses that are suing the $3.05 trillion-asset bank. REV. It does not apply to SBA subsidies paid on SBA loans, Shuttered Venue Operator Grants, or Restaurant Revitalization Grants. 297 0 obj <>/Filter/FlateDecode/ID[<681772630396424DB877BF5F6FFE419B>]/Index[276 36]/Info 275 0 R/Length 98/Prev 155748/Root 277 0 R/Size 312/Type/XRef/W[1 2 1]>>stream To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. SACRAMENTO Governor Gavin Newsom, Senate President pro Tempore Toni G. Atkins and Assembly Speaker Anthony Rendon today 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. MzA1NjUwNDUyNzBkY2M0YTcxMWY2NGYzZjRhMzk3NGVkODkwNWRlNjQ0YWY2 Manufacturers need a two-pronged approach to manage risks. 6 P.L. Acting Governor Eleni Kounalakis Signs Legislation to Support States COVID-19 Preparedness, PHOTOS: Governor Newsom Visits Diablo Canyon Power Plant, More Time to File State Taxes for Californians Impacted by December and January Winter Storms, Governor Newsom on Read Across America Day: While Other States Ban Books, Were Helping Students Read, Governor Newsom Proclaims State of Emergency in 13 Counties Due to Winter Storms, Activates California Guard. 61; CAL. PPP Forgiveness: Urgent News About Nonconformity in California, Key Tax Credits Have Expired: What This Could Mean for You, 79245 Corporate Centre Drive, La Quinta, CA 92253. The California Franchise Tax Board (FTB) plans to issueguidanceexplainingqualification and other requirements with respect to AB 80, and it is expected to include guidance for taxpayers that have already filed 2020 California individual or corporate tax returns. The 25% gross receipts limitation does not apply to the EIDL advance grants, so taxpayers may exclude the EIDL grants and may fully deduct these expenses even if they dont meet the threshold reduction. Rul. The SBA offered banks, and later fintech companies, processing fees based on the size of loans, which ranged from 5% for loans of $350,000 or less to 1% for loans of $2 million. This is important new information that needs to be shared with businesses immediately and it will likely come as a surprise to many. REV. Ultimately, this will make tax planning for 2021 essential if a business received loan forgiveness during the year, as this nonconformity was not anticipated. MzJiOWRiMDc3MWUyZjhhMGViZjEyNDFkNWI4MTg3ZTU3NWRmNjEzYWNjNmM4 Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. 80, deductions for expenses paid using PPP loan proceeds are allowed even when the loan is forgiven provided the taxpayer is not an ineligible entity. Under the legislation, an ineligible entity is a taxpayer that either: (i) is a publicly-traded company; or (ii) does not experience a 25% reduction in gross receipts in an applicable quarter of 2020 as compared to the same quarter in 2019.2, The PPP was created as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which provides forgivable business loans when the recipient meets certain eligibility criteria.3 Under the PPP, qualifying borrowers can apply to have some (or all) of their loan forgiven to the extent it was used for certain expenses such as rent, utilities, mortgage payments, and employee payroll. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. Mr. Grossman specializes as a subject matter expert in California Corporation Income or Franchise Tax matters. Please enable JavaScript to view the site. tax guidance on Middle Class Tax Refund payments, General information for the Middle Class Tax Refund, Paycheck Protection Program (PPP) loan forgiveness, FAQs for Paycheck Protection Program (PPP), Coronavirus Tax Relief for Businesses and Tax-Exempt Entities, Revenue and Taxation Code (RTC) section 17131.8(g)(3)). 80 defines an ineligible entity in part as a taxpayer that does not meet the reduction from the gross receipts requirements of Section 636(a)(37)(A)(iv)(bb) of Title 15 of the United States Code, as added by Section 311 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260). See CAL. Assembly Floor Analysis for A.B. 1577, 1-3 (stating that [t]his act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect). The agreement also provides $12 million in state funds to support associated county administrative workload. The agreement reflects a four-fold increase from $500 million to more than $2 billion for grants up to $25,000 for small businesses impacted by the pandemic, and also allocates $50 million for cultural institutions. Principal, SALT Services We are now into the second year of the requirement for most partnerships to file Schedules K-2 and K-3, and the compliance challenges continue. These subsidies/grants are subject to California tax, but expenses are fully deductible on the California return. N2NiMzE4OGQyZTA0YjBmOWI5YTk3ZTg0MTJhOGY3YTVkZGIyNDllOTExZDgw Lauren is a senior associate working in the Washington National Tax practice of Deloitte Tax LLP. 1557 to provide some relief.6, On March 27, 2020, the federal government enacted the CARES Act in response to the COVID-19 pandemic.7 Sections 1102 and 1106 of the CARES Act amend section 7(a) of the Small Business Act to create the PPP, through which up to $349 billion in funding was provided to businesses through federally guaranteed loans. & TAX CODE 17024.5(a); 23051.5(a). 80. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. . The new federal resources will extend care for children of essential workers through June of 2022, and funds increased access to subsidized child care for more than 8,000 children of essential workers and at-risk children who are not currently served in the system through June of 2022. California aligning with fed PPP loan treatment. Shortly after enactment of the CARES Act, the Internal Revenue Service (IRS) issued Notice 2020-32 providing that deductions for business expenses otherwise allowable under the Internal Revenue Code (IRC) (e.g., deductions under IRC Secs. 1577 disallows a credit or deduction for Loan Forgiveness Eligible Expenses to the extent of the Forgiven Loan Amount. It is worth noting that A.B. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein.