Maeda Palius
on
April 26, 2021

UPDATE ON CALIFORNIA PPP LOAN FORGIVENESS

To Our Valued Clients and Friends,
 
California Bill AB-80 was recently amended and includes some significant changes as it pertains to PPP Loan Forgiveness for California Tax purposes. 

WHAT ARE THE HIGHLIGHTS OF THE CHANGES MADE TO CA AB-80?
· The Proposed Bill is not final, and more changes may be made. Experts believe it may take 4 or more weeks to finalize.
· There is no longer a $150,000 limit on the amount of expenses which may be deducted.
· There are now limits on who may qualify for this treatment and not everyone will qualify. As currently written, to take the deductions a business must demonstrate at least a 25% reduction in Gross Receipts in the 1st, 2nd or 3rd Quarter of 2020 relative to the same quarter in 2019. If the PPP application was submitted on or after January 1, 2021, then the 4th Quarter of 2020 may be used as well.
· There are provisions for new businesses as well.

HOW DO THESE CHANGES EFFECT THE TIMING OF YOUR TAX PREPARATION?
When the bill passes, we will promptly begin finalizing tax returns based on current guidance. However, tax authorities have been extremely specific on how items related to PPP Forgiveness must be reported. Therefore, we may need to wait on the FTB to provide additional guidance for how to report these items on California returns.

ARE YOU THE ONLY ONE?
No, no, no! You are not alone! We have many clients who are in this holding pattern awaiting final legislation! However, we are optimistic this legislation will pass relatively soon and the FTB will provide guidance quickly thereafter. We appreciate your continued patience as our legislators work on this important issue.

If you have any questions or concerns, please do not hesitate to contact us.

Wishing You Wellness,
 
Maeda Palius, Jason Janzen, Annika Jensen and the POJ Team

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