While income from PPP loan forgiveness is excluded for California purposes, any credit or deduction allowed for any amount paid or incurred should be reduced by the amount of the exclusion allowed under the PPP.
Consequently, can I still get PPP loan forgiveness?
Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender.
Beside this, do I have to wait 24 weeks to apply for PPP loan forgiveness?
Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination.
Does California conform to Cares Act?
California does not conform to some of the other changes made by the CARES Act, including those related to: Loan forgiveness related to the Paycheck Protection program. … Health-savings accounts changes (California does not conform to health-savings account rules generally speaking)
Since any company that’s eligible to receive an EIDL loan is eligible for a grant, the process of getting the up to $10,000 advance for your business was relatively straightforward. You simply went to the SBA’s disaster loan assistance page and filled out an application.
Therefore, when the loan is legally forgiven by the lender, the accounting entry would be a debit to a long-term liability account (i.e., “PPP Loan Liability”) and a credit to income.
Under normal circumstances, forgiven loan amounts are generally taxable for federal income tax purposes, but the CARES Act, under section 1106(i) of the act, expressly excludes the forgiveness of PPP loans from federal gross income, and thus federal income tax.
2021-2. Section 276 also provides that forgiven PPP loan amounts are treated as tax exempt income for purposes of Sections 705 and 1366 of the Internal Revenue Code (the Code).
If you don’t apply for loan forgiveness, your loan payments will be deferred for 10 months after the end of your selected covered period (8 or 24 weeks, depending on your loan) No collateral or personal guarantees are required. The government and lenders are not allowed to charge you any fees for your loan.
You don’t report forgiveness until you actually receive it. If the loan isn’t forgiven until 2021, then you don’t report it until 2021. The PPP forgiven amount is excludable on both the CA and federal return. On the federal return you can fully deduct the expenses that were paid with the PPP forgiven loan amount.
For example, a borrower whose 24-week covered period ends on October 30, 2020 has until August 30, 2021 to apply for forgiveness before loan repayment begins.
First PPP Loan Forgiveness Deadline is August 30, 2021
Your deadline for submitting a PPP loan forgiveness application ends 10 months after your covered period ends. The common ending date for the covered period for the first round PPP loan draws was October 30, 2020.
PPP Loan Expense Deduction Conformity
In September 2020, California enacted AB 1577, which conformed to the CARES Act exclusion from gross income for PPP loan forgiveness.