N2NiMzE4OGQyZTA0YjBmOWI5YTk3ZTg0MTJhOGY3YTVkZGIyNDllOTExZDgw REV. Governor Newsom, Legislative Leaders Announce - California Governor GTIL and each member firm of GTIL is a separate legal entity. 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. 1577 adds two identical California tax provisionsCalifornia Revenue & Taxation Code (CRTC) section 17131.8 under the Personal Income Tax Law (PITL) and CRTC section 24308.6 under the Corporation Tax Law (CTL). 2023. The agreement adds just over $400 million in new federal funds that will provide stipends of $525 per enrolled child for all state-subsidized child care and preschool providers serving approximately 400,000 children in subsidized care statewide. Partner, State and Local Tax West Region Leader. Grant Thornton LLP is a member firm of GTIL. For this reason, taxpayers that have already filed or paid tax following the provisions of A.B. You must pay it back within either 3 or 5 years. A.B. The agreement would provide the $600 payments to households with ITINs and income below $75,000. Emergency Financial Relief to Support Community College Students. Combined, the agreement represents a total of 5.7 million payments to low-income Californians. Otherwise . For tax yearsbeginning in2019,qualifyingtaxpayers cannowexclude PPP loanforgivenessorEIDL grants fromCalifornia gross incomeanddeductallowablecoveredexpenses paid withPPP loan or EIDL grant proceeds. For additional information, visit Section 311 of the CAA, 2021, Revenue and Taxation Code (RTC) section 17131.8(g)(3)), and Small Business Administration (SBA) guidance. The 2023 BDO CFO Outlook Survey offers critical insights to support strategic decision-making and help your company thrive. 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. 15 See e.g., I.R.C. %%EOF Note that the citation to the federal law presumably should be 15 U.S.C. 1577 and how these changes impact their California tax liabilities. Y2VmMzUxZjkwZWU4YmYxYWRhYTJlNWMyOTM4MTQ2NGI4MThhNDBmOGNjNmY3 Watch industry leaders discuss advice on innovation. We are at a critical moment, and Im proud we were able to come together to get Californians some needed relief.. 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. 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. Taxpayers that have received PPP loans should consult with their California tax advisors regarding the changes made by A.B. When policy shifts, our insights and analysis can help you plan and respond. CLASS ACTION LAWSUIT AGAINST KSERVICING/KABBAGE for PPP LOAN - reddit This isnt the tech you know. MzA1NjUwNDUyNzBkY2M0YTcxMWY2NGYzZjRhMzk3NGVkODkwNWRlNjQ0YWY2 N2Y5N2FjOGU2ZGVmZWI4MDRhNTg4NjNjZjgxYjA2MzBlYjU1MmMzNDY0NTY1 We are building an economic foundation for the recovery of jobs, small businesses and, indeed, our everyday lives, said Speaker Rendon. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. Joshua Josh is a State and Local Tax (SALT) Principal in the San Francisco office of Grant Thornton LLP. California law does not conform to this expansion of PPP eligibility. Larger firms that took out higher loans would still be subject to the same ceiling of $150,000 in deductibility. 80. If you make an election under Rev. 116-139, the Enhancement Act).8 The federal government also enacted the Paycheck Protection Program Flexibility Act (P.L. Wordfence is a security plugin installed on over 4 million WordPress sites. 2 Under the Consolidated Appropriations Act, 2021, as referenced in A.B. SESS. Drive maximum value across your supply chain. 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)). SESS., 1 (see new CRTC 17131.8(a)), 2 (see new CRTC 24308.6(a)). 16 See I.R.S. CODE 17131.8(g)(3)(B); 24308.6(g)(3)(B). YjRjOWE1NzUwNDNiNTkxY2NkYmRhODRjM2M0MzBiOWQwNjYwZjIyNDQ3NTEw Dana is based in San Jose, California. hb```"{ 1 A.B. 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- I have already received forgiveness on my second draw, which was thankfully from a different lender, therefore reason 2 of why I was denied is invalid. 13 Specifically, A.B. 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. 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. If you have questions regarding A.B. & TAX. The compromise builds on the initiatives in the Governors state budget proposal to provide cash relief to lower-income Californians, increase aid to small businesses and provide license renewal fee waivers to businesses impacted by the pandemic. Sec. If you believe Wordfence should be allowing you access to this site, please let them know using the steps below so they can investigate why this is happening. On September 9, 2020, California's Governor Newsom signed Assembly Bill 1577 (A.B. 1577, and provides some taxpayer considerations. 636(a)(37)(A)(iv)(I)(bb). Proc. 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. On April 29, 2021, California Gov. Supreme Court questions Biden student loan debt forgiveness Taxpayers that have already filed their 2019 and 2020 returns should consider amending these returns to incorporate the adjustments allowed by AB 80. 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. California aligning with fed PPP loan treatment | Grant Thornton Unable to verify your submitted forgiveness amount and/or documents or 2.) The ARPA expanded the PPP to include certain nonprofit entities and certain internet publishing organizations. Modesto, CA 95350, (209) 527-4220 (phone) 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. Generated by Wordfence at Sat, 4 Mar 2023 17:56:41 GMT.Your computer's time: document.write(new Date().toUTCString());. Banks face new challenges on regulation, ESG, mortgages, digital assets, audit, tax or digital transformation in 2022. At Grant Thornton, we dont just understand your business. This will bring conformity to the federal treatment of PPP loan forgiveness and EIDL grants, with one important exception relating to reduction in gross receipts in the 2019-2020 taxable year. The payments will be provided to these households shortly after they file their 2020 tax returns. 21-17) does not apply to either first- or second-draw loans received after March 31, 2021. OTc5MjdiOWVmNjcwMzYzYTRjZjhmOWI1YmQzZDczMDNkYzZmYjk2Mzk2ZWJi CalFresh Student Outreach and Application Assistance. On February 9, 2022, Senate Bill (SB) 113 (Economic Relief) was enacted to allow an income exclusion for Shuttered Venue Operator (SVO) grants provided under CAA for tax years beginning on or after January 1, 2019 and for Restaurant Revitalization Fund (RRF) grants provided under ARPA for taxable years beginning on or after January 1, 2020. Manufacturers need a two-pronged approach to manage risks. However,AB 80 does not permitanindividual owner or corporation that is anineligible entity to deduct PPP covered expenses. For taxpayers other than ineligible entities, A.B. Podcast: New hiring credit enacted for small businesses. KServicing stated they were 1.) Please see www.deloitte.com/about to learn more about our global network of member firms. Rather than deny deductions for expenses paid with forgiven PPP loan proceeds as A.B. In particular, Californias definition of an ineligible entity borrows its 25% diminution in gross receipts test from the qualification (i.e. For tax years beginning in 2019, qualifying taxpayers can now exclude PPP loan forgiveness or EIDL grants from California gross income and deduct allowable covered expenses paid with PPP loan or EIDL grant proceeds. 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 20 See A.B. These pages do not include the Google translation application. 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 $50 million for cultural institutions. 21-17) does not apply to either first- or second-draw loans received after March 31, 2021. MTQ4MmJiZjg5ZGY5MWQyZDU2ZmFiZDM1ZmZmZjkyM2E3MDRkYmViZTViM2Yz Not-for-profit organizations and higher education institutions, Transportation, logistics, warehousing and distribution, Operation and organizational transformation, Blockchain, digital assets & Web3 solutions, Do not sell/share my personal information. Gavin Newsom signed Assembly Bill 80 (A.B. 11 See 15 U.S.C. YjNiOTAxNmNjNzdiZTlhZGIxNjNmYmViOWVmYThmZWI3YTRmMzM0ZmZiNjBj Companies must focus on attracting and retaining talent, modernizing HR to serve new business needs while becoming more efficient. On April 29, California Gov. California law excludes PPP loans forgiven under the CARES Act from gross income, Telecommunications, Media & Entertainment, Background on federal legislation relating to the PPP, Overview of notable changes under A.B. (209) 527-4247 (fax). Podcast: Should borrowers submit PPP loan forgiveness applications early? GTIL is a nonpracticing umbrella entity organized as a private company limited by guarantee incorporated in England and Wales. Principal, SALT Services MTU3YmNhZDYyNDc5ZTczNDMyNzc0ZjU1YTI3NWRlZjg3OWVkNGRiYjAzNjUz hVkkF+qe6 Al+vji"3{gYiSZ2e):t z$/=N,zG&F0ihH&h jucN^#VBOZ.fY+n?1o%?}j-]drM5~j?oZQ~|f)?gV~R,.jz2,QzOu"JY[#M}K3_OO^6b^,#lYu7O. REV. Here are key facts about the PPP forgiveness process and how it impacts business owners owing less than $50,000. 117-6). 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. If you are a WordPress user with administrative privileges on this site, please enter your email address in the box below and click "Send". 1577), Laws 2020. 276 0 obj <> endobj California Rebuilding Fund Small businesses may be eligible for a loan up to $100,000 from the California Rebuilding Fund. In its May 2021 online issueofFTBTax News,the FTB also instructedtaxpayersthat forgiven PPP loansshould notbeincludedas gross receiptswhen calculating CaliforniasLLCfeeand tax. hbbd```b``Z " e1} Dl` ,r`BD* - hcHh]bo O>? California Partially Conforms to Federal PPP Forgiveness - Moss Adams The American Rescue Plan Act (ARPA) (Public Law 117-2) was enacted on March 11, 2021. Fill the form below and we'll contact you to schedule an appointment: Grimbleby ColemanCertifiedPublicAccountants,Inc. California Conforms to Federal PPP Loan Forgiveness Rules. To qualify for expense deductions, basis adjustments, and lack of reduction of tax attributes related to an SOV grant under SB 113, you must meet the following qualifications. Drivers, key risks and opportunities from our leaders and Nareits senior v.p. California taxpayers that have received PPP loans or EIDL advance grants will likely want to consider the new law when filing their 2020 California corporate and individual income tax returns. REV. & TAX. US affiliates to deem to elect waters edge, California legislature allows group returns for international business travelers. Credit: Spidell Tax, Analysis, and Education Go Back Print. Fullwidth SCC. Golf is better when were all playing together. The owner of this site is using Wordfence to manage access to their site. %%EOF ZjM5OWM1NmRhZmIzYzYxY2VlZmY4NDExYjhjMDA0YmRlOThjMjBhYjk3Nzkz 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. CODE 17131.8(b); 24308.6(b), as added by A.B. Matt Tierney and Andre Bourgon from Grant Thornton discuss how to execute a winning ecosystem strategy to manage insurance companies. The agreement also reflects fee relief for more than 600,000 barbering and cosmetology individuals and businesses licensed through the Department of Consumer Affairs. All references to Section, Sec., or refer to the Internal Revenue Code of 1986, as amended. This agreement builds on Governor Newsoms proposal and in many ways, enhances it so that we can provide the kind of immediate emergency relief that families and small businesses desperately need right now, said Senate President pro Tempore Atkins. 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. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Osborne Rincon CPAs | 79245 Corporate Centre Drive, La Quinta, CA 92253 | 760-777-9805 | Copyright 2018 Osborne Rincon. Payroll Protection Program (PPP) loans have been a lifeline to businesses since the onset of COVID-19. Under Section 1106 of the CARES Act, a recipient of a covered loan under the PPP is eligible for forgiveness of indebtedness on the loan in an amount generally equal to the sum of certain costs incurred and payments made during either the eight -week or the 24-week period beginning on the date of the origination of the covered loan, Digs with Dignity is on a mission to provide those transitioning from homelessness with custom, fully furnished living spaces that feel like home. To stay logged in, change your functional cookie settings. MzJiOWRiMDc3MWUyZjhhMGViZjEyNDFkNWI4MTg3ZTU3NWRmNjEzYWNjNmM4 162, 163; CAL. You can count on us to prioritize and complete work to the best of our ability based on these changes. New Paycheck Protection Program (PPP) Forgiveness Rules for $50,000 and The Multistate Tax alert archive includes external tax alerts issued byDeloitte Tax LLP's Multistate Tax practiceduring the last three years. OTFhMGFmZGQ0YThjYTRlMDNjYWE5NDNlMmI2NjY2ZTFiYTdmNzc0NGFjM2Zj A diversity, equity and inclusion video series. California taxpayers canalsofully deduct expenses paid with EIDL fundssince this thresholddoes not apply toEIDL grants. PPP Loan Forgiveness for Borrowers International China Practice India Practice Latin America Practice Consulting Technology Risk & IT Compliance Strategy & Operations Transactions Specialty Technology Automation Data Analytics & BI Development & Integration Enterprise Systems Technology Products Technology Strategy Automation Learn how were making the game more inclusive for all. Notice 2020-32 (available here). PDF As of March 12, 2021 - United States Secretary of the Treasury ZmEwMjJhMjJhYSJ9 MWM2OTQ4NmFlOWMzMjAzOGE0OWFjNWI2NmU3ZmQ0MjU3Y2U0ZDcwMWMxYWU1 17 A.B. When addressing the new expectations of your workforce, speed is a key factor. 1577 may consider the need to amend their California return and/or recompute their claimed deductions for expenses paid with PPP loan proceeds that were forgiven. 61; CAL. OTQyYWYwNjA5N2Y5ZTg1YTcwMGMzNTUyNjE3NjcyYWIzNzk2NzI3OGM4MzM1 and CTL purposes. 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. Find out how the technology, banking and asset management sectors are adapting their strategies to handle todays threats. (HTTP response code 503). 116-136, 1105(i). (CAL. 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). To be eligible, businesses must have: Employed 50 or less full-time employees Had gross revenue of less than $5 million in 2019 ZTI5MDAwNDczOWI5MWMxY2RlNWVhNzcyY2Q3OWVmNmI2N2Y2ODEyZmM1NTYz The path to quality loyalty programs begins with adopting the right analytics looking deeper into customer purchase patterns to uncover true trends. For California purposes, forgiven PPP loans, SVO grants, and RRF grants are excluded from gross income. 80 amends California law to operate more consistently with the federal CAA regarding the permissibility of deductions for expenses paid with forgiven PPP loan proceeds. endstream endobj startxref 3 P.L. 1577, A.B. This Google translation feature, provided on the Franchise Tax Board (FTB) website, is for general information only. For forms and publications, visit the Forms and Publications search tool. :D 8 Your ERM needs to cover new gaps and drive new value. If you have any questions related to the information contained in the translation, refer to the English version. All rights reserved. California PPP Update 4.26.2021 : taxpros - reddit However, they were amended to apply to taxable years beginning on or after January 1, 2019. MzA5NDZkYmY0ZWFjYTU3MzIyNjAzOGFiNmVmZGQxMTc2MGUxN2VkYTMxNTZi eyJtZXNzYWdlIjoiNWIzZGU0MDczYTM5MDRlMGI1ZTJmM2QxOGExOTlmZjY0 0 You meet the 25% gross receipts reduction qualifications. 636(a)(37)(A)(iv)(I)(bb) was added by Section 311 of Division N of the CAA. News Spidell's California Minute . NDQyOTJlYTVmOTZkMzNjMTFiNDZlY2VjNjdlMmViOTViNWVlZmRkMzIyZWNl If your forgiven loan relates to an EIDL Grant or Targeted EIDL Advance, you are not required to meet these qualifications to deduct expenses. But yesterday, the Calfornia Senate approved AB 80, which would make forgiven PPP loans tax-deductible - and give businesses a breather. Ataxpayercannot combinetwo or more2020quarterly losses to arrive at thisthreshold. This message will not be visible when page is activated. The new application form for PPP loans under $50,000 only requires borrowers to confirm the PPP-loan proceeds were used for eligible costs, and to provide supporting documentation showing expense payments. If you think you have been blocked in error, contact the owner of this site for assistance. 116-260. Lauren is a senior associate working in the Washington National Tax practice of Deloitte Tax LLP. The undersigned certify that, as of July 1, 2021 the internet website of the Franchise Tax Board is designed, developed and maintained to be in compliance with California Government Code Sections 7405 and 11135, and the Web Content Accessibility Guidelines 2.1, or a subsequent version, as of the date of certification, published by the Web Accessibility Initiative of the World Wide Web Consortium at a minimum Level AA success criteria. For federal qualifications regarding income tax treatment, visit Coronavirus Tax Relief for Businesses and Tax-Exempt Entities. You meet the 25% gross receipts reduction qualifications. ~A=.d XmtLY RLqg! U Yjk1NTlhZjUzMmI3ODFlN2VlZDM3OWQ5OWM1ZDgzYmM3NTgyMWVkZjViZTQy 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. 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. (209) 527-4247 (fax), https://www.grimbleby-coleman.com/resources/articles/265, 200 West Roseburg Avenue According to the Franchise Tax Board, because AB 80 only conforms to the federal PPP loan forgiveness provisions as they were last amended by the Consolidated Appropriations Act of 2021, California does not conform to the extension of the PPP loan program by the PPP Extension Act of 2021 (P.L. View the list of archivedMultistate Tax alerts. 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 . 2020), A.B. 2021-20 for federal purposes, we will follow the federal treatment for California tax purposes. 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 PPPEA was enacted on March 30, 2021 and extended the covered period of the PPP from March 31, 2021, through June 30, 2021. The COVID-19 is having a huge impact on the global economy, with manufacturers and the travel industry bearing the initial brunt as the impact expands. Californians have been hurting. What will help even more is using a holistic approach to create a winning strategy. A disallowance of the deductions effectively neutralized the benefit of the tax-exempt nature of the PPP loan forgiveness. This is alyx our streamlined concierge-enabled platform that connects real problems with the right resources and real solutions. 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. 1577 or other California tax matters, please contact any of the following Deloitte professionals: Roburt Waldow, principalMultistate, Deloitte Tax LLP, Washington National Tax, +1 612 397 4487, Christopher Campbell, principalMultistate, Deloitte Tax LLP, Washington National Tax, +1 213 553 3072, Valerie Dickerson, partnerMultistate, Deloitte Tax LLP, Washington National Tax, +1 202 220 2693, Kathy Freeman, managing directorMultistate, Deloitte Tax LLP, Sacramento, +1 916 288 3392, Shirley Wei, senior managerMultistate, Deloitte Tax LLP, Washington National Tax, +1 213 553 1715. These external alerts highlight selected developments involving state tax legislative, judicial, and administrative matters. Copyright 2023 BDO USA LLP. 1577 and how these changes impact their California tax liabilities. The web pages currently in English on the FTB website are the official and accurate source for tax information and services we provide. 1577, 2019-2020 REG. Spidell Publishing - one of California's leading continuing education organizations - is reporting that the PPP loan forgiveness exclusion enacted by AB 80 (Ch. Illinois Governor J.B. Pritzker signed new legislation (P.A. To help guide planning, weve highlighted key topics under focus from regulators worldwide and what those developments could mean for business. National Tax Office Leader. An additional $310 billion of PPP loan funding was subsequently provided by the federal Paycheck Protection Program and Health Care Enhancement Act (P.L. 15 U.S.C. We understand you. 80) providing greater conformity to federal law regarding the deductibility of expenses paid using forgiven Paycheck Protection Program (PPP) loans.1 Under A.B. Consult with a translator for official business. Cybersecurity can never rest. endstream endobj startxref 116-142, the Flexibility Act) to, among other things, modify certain restrictions imposed in regulations issued by the Small Business Administration (SBA) relating to qualifications for forgiveness of PPP loans.9 Administered by the SBA and overseen by the US Treasury Department, the PPP is designed to provide short-term relief to millions of Americas businesses to ensure they can sustain operations and keep their workers employed as the economy recovers.10, The PPP allows qualifying businesses to apply for a loan to maintain their payroll and some overhead expenses through the period of emergency.11 If a business takes a loan under the PPP, it may apply to have some or all of the loan forgiven (the Forgiven Loan Amount)specifically that portion of the PPP loan used to cover payroll costs, interest on mortgage obligations, rent obligations, and utility payments, subject to specific conditions and during the 24 week period after the loan is distributed (the Loan Forgiveness Eligible Expenses).12 Generally, federal and California law treat the cancellation of debt as gross income.13 However, the CARES Act excludes the Forgiven Loan Amount from gross income for federal tax purposes.14 Additionally, for federal and California tax purposes, certain business expenses may be deducted such as those under IRC sections 162 or 163.15 The Internal Revenue Service, however, issued Notice 2020-32 clarifying that deductions otherwise allowable under any provision of the IRC, including sections 162 and 163, are not allowed to the extent of the Forgiven Loan Amount.16.
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