Golden State (California) stimulus money taxable on the federal return

[JeffB]

Is the Golden State (California) stimulus money taxable on the federal return? I am able to find lots of documentation for treatment of federal stimulus money but there is not much on the state stimulus money and whether it is taxable on the federal return.  Has anyone found documentation on this?

[George4Tacks · Accepted solution]

https://www.caltax.com/forums/topic/golden-state-stimulus-taxable/

[JeffB]

Thanks George - I had found this article in my research and certainly appreciate you finding it and providing an answer.

[George4Tacks]

@JeffB I should add that the link is not an "official" Spidell statement. From their updates seminar I heard "We believe these grants would be excludable for federal purposes under the general welfare doctrine. However, the IRS has not confirmed this position."

[qbteachmt]

I have this link, which has a great reference table:

https://gpwcpas.com/grant-credit-loan-and-other-relief-comparison-chart/

[JeffB]

Thanks again George. I am going to "unresolve" this in the event someone else has any additional information.  

[JeffB]

Thank you, this is a great table and I am saving for future reference.  Hopefully they will update it with the specific state payments.

[JeffB]

Well, can't figure how to unresolve.  I am going to keep looking and if I find anything, I will post it.  If anyone else finds something, I would appreciate the information. 

[qbteachmt]

@tax_investment_life posted this last week:

The CA Tax on SVOG may be removed, it is in the latest budget proposal:

https://lao.ca.gov/Publications/Report/4492

Conform to Federal Tax Treatment of Federal Economic Relief. The Governor’s budget proposes to exempt certain federal pandemic‑related grants from taxation. In late 2020 and early 2021, the federal government created two new grant programs, the Shuttered Venue Operators Grant (SVOG) and the Restaurant Revitalization Fund (RRF), to provide additional fiscal relief to businesses that were especially impacted by the pandemic. These grants are not taxable under federal law. Under current state law, however, both grants are taxable. This proposal would conform state law to the federal law, exempting the grants from taxation. This change would reduce state tax revenues by about $500 million over several years.

[qbteachmt]

The CA Tax on SVOG may be removed, it is in the latest budget proposal:

https://lao.ca.gov/Publications/Report/4492

Conform to Federal Tax Treatment of Federal Economic Relief. The Governor’s budget proposes to exempt certain federal pandemic‑related grants from taxation. In late 2020 and early 2021, the federal government created two new grant programs, the Shuttered Venue Operators Grant (SVOG) and the Restaurant Revitalization Fund (RRF), to provide additional fiscal relief to businesses that were especially impacted by the pandemic. These grants are not taxable under federal law. Under current state law, however, both grants are taxable. This proposal would conform state law to the federal law, exempting the grants from taxation. This change would reduce state tax revenues by about $500 million over several years.

[tax_investment_life]

Fingers crossed on this.

But be aware CA budget is just a proposal and may not pass until as is.... and I think it doesn't become offical until June.

So once again CA requires us to run 2 scenario's and wait for results (shutters remembering all the CA PPP nonsense last year).