Scorp and LLC

[delmarflwr2]

What does the statement "California does not confirm to any credit or deduction as a result of the PPP

loan forgiveness amounts. Any credit or deduction otherwise allowed for any amount paid or incurred should be reduced by the amount of the exclusion allowed under the PPP for California Purposes

[IRonMaN]

It means just what it says- PPP money isn’t free money in CA

[delmarflwr2]

That's what I thought but just wanted if verified. So do you just add back the amount that was deducted to bottom line? There is no form for adjustments to do so unless I am blind. If you know that would be great

[IRonMaN]

Sorry, I primarily prepare Mn returns and we have a specific add back line in the return.  Off hand I’m not sure how CA is doing it.

[qbteachmt]

You might search the web, such as:

https://www.caltax.com/news/flash-email/2020-71-california-says-no-deduction-for-expenses-paid-with-...

[delmarflwr2]

So I just deduct the wages that were used to get loan forgiven from the full amount allowed on Federal?

Some states have a deduction but do not see one for Califronia

thank you

[qbteachmt · Accepted solution]

"Some states have a deduction but do not see one for Califronia"

Because it specifically is the opposite; CA is nonconforming, means, it did not agree to do the same as the Feds.

If you got PPP of $10,000 then that much in wages is not deductible as expense for CA. They are not taxing the forgiven debt as income, but they are not allowing you to also include the offsetting expense as deductible. For every other State that conforms to Fed, and for Fed, you are getting a double-benefit: not taxable income and still get to deduct the expenses.

[delmarflwr2]

Thank you.

[PapyrusTax]

I'm trying to figure out where to enter this addback into ProSeries 1120S California.  Seems no matter what screen I add it back, it doesn't change the return.

[bweeks51]

I'm having the same exact problem. My client's PPP was the 2nd draw during the PPPEA after 3/31.  It needs to be included in CA income although it is excluded from Fed . Expenses can be deducted against both because of the 25% gross receipts reduction qualifications but I can't seem to get the income to be added on the CA side. 

[qbteachmt]

"but I can't seem to get the income to be added on the CA side."

There is an image here for CA additions and subtractions. See if that helps.

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/ca-relief-grant-5000/00...