Question

California PPP loan exclusion from income

Forum|Forum|4 years ago
February 17, 2022
2 replies
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The Turbotax partnership return for California does not conform to the California form 565 instructions for reporting income. The program erroneously asks "Was the loan forgiven between April 1, 2021 and June 30, 2021". And writes in its tax guidance:

"California law does not conform to this extension and does not allow an exclusion from gross income for PPP loans forgiven during the extended covered period beginning after March 31, 2021 until June 30, 2021."

The California form 565 instructions state:

"California law does not conform to this extension and does not allow an exclusion from gross income for PPP loans forgiven due to the extended covered period after March 31, 2021 to June 30, 2021".

The key words Turbotax ignored was "due to". Which means, according to the FTB faqs-for-paycheck-protection-program:

"California law does not conform to this extension and does not allow an exclusion from gross income for PPP loans made during the extended covered period after March 31, 2021 through June 30, 2021." not when the loan was forgiven.

The extended covered period allowed loans to be made during the period and has nothing to do with when the loan was forgiven.

Get a refund from Turbotax for the California return ($50).

TurboTax Business Windows

A

ARetiredCPA

Same problem with instructions for CA form 100S -

https://ttlc.intuit.com/community/business-taxes/discussion/ppp-loan-forgiveness-treatment-wrong-in-business-california/01/2522754/highlight/false#M83160

Hey Intuit?

G

glenn6770362Author

When I contacted intuit customer service their 2nd level technical support simply said "there are lots of bugs in the program". I told them this wasn't a bug - its a failure to understand plain English in the California Franchise Tax board documentation.

Oh well.

J

jzeng

Things are changed. Please read the latest from the California government:

https://www.ftb.ca.gov/about-ftb/newsroom/covid-19/faqs-for-paycheck-protection-program.html#:~:text=The%20PPPEA%20extends%20the%20covered,2021%20through%20June%2030%2C%202021.

Unfortunately, at this moment (Sept 5, 2022), the TurboTax Business is still not using the latest info. This causes people to pay more taxes. I hope Intuit can do its job better. Of course, making people pay more taxes is always safe to favor the government 😞

The important change is:

The PPPEA extends the covered period of the PPP to June 30, 2021. California law conforms to this extension and allows an exclusion from gross income for PPP loans made during the extended covered period after March 31, 2021 through June 30, 2021.