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Cares Act County Business Grants

StephanieS
Level 1

Are the grants given to businesses from their county taxable?  The county received money from the CARES Act and the county then gave that funding to eligible businesses in the form of grants.

Many of my clients received these grants.  This is in addition to the PPP and EIDL (which I know are non-taxable).  Do we know if this county grant money is taxable?

The closest I can find is that they are taxable here: https://www.irs.gov/newsroom/cares-act-coronavirus-relief-fund-frequently-asked-questions but this seems odd since PPP and EIDL are both nontaxable.

Thank you!

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qbteachmt
Level 15

I believe your link is accurate for what you asked. I have had my State's grant page open all this time, to monitor the refreshes, availability and distribution of funds by type of grant, which town and/or county, and also I keep scanning the individuals and businesses listed for their amounts. I understand this as, they got taxable income to use on specific expenses, so that will be a wash for them. It's not the same as EIDL or PPP. For examples, a health professional partnership got funds towards their additional costs for PPE; a theater got the funds towards lost revenue to prevent loss of the building and to cover ongoing costs as a bridge to reopening. The county distributed the allocations from the State, which got the Federal funds.

"This financial assistance was funded through $1.25 billion in federal emergency relief funding through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The receipt of a government grant by a business generally is not excluded from the business's gross income under the [IRS] Code and therefore is taxable. More information is available here."

And that link from my State's website is the same one you already provided 🙂

 

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qbteachmt
Level 15

I believe your link is accurate for what you asked. I have had my State's grant page open all this time, to monitor the refreshes, availability and distribution of funds by type of grant, which town and/or county, and also I keep scanning the individuals and businesses listed for their amounts. I understand this as, they got taxable income to use on specific expenses, so that will be a wash for them. It's not the same as EIDL or PPP. For examples, a health professional partnership got funds towards their additional costs for PPE; a theater got the funds towards lost revenue to prevent loss of the building and to cover ongoing costs as a bridge to reopening. The county distributed the allocations from the State, which got the Federal funds.

"This financial assistance was funded through $1.25 billion in federal emergency relief funding through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The receipt of a government grant by a business generally is not excluded from the business's gross income under the [IRS] Code and therefore is taxable. More information is available here."

And that link from my State's website is the same one you already provided 🙂

 

*******************************
"Level Up" is a gaming function, not a real life function.

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qbteachmt
Level 15

I wanted to add an Updated comment, a month after this topic was started. I see on the web that some States have different treatment or are even just now passing bills to exclude this type of grant from tax locally.

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"Level Up" is a gaming function, not a real life function.