TaxProTalk.com

I have two CA clients that received large PPP loans. Neither client met the 25% reduction in revenue requirement per AB-80 to exclude the income from taxation for CA purposes. If passed, CA AB-281 would make PPP expenses deductible for CA purposes for all taxpayers regardless of financial situation. My two clients are on extension while we wait for resolution on AB-281; however, per this page, there is no update as to when the bill will be heard:

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202120220AB281

I'm wondering if I should just file knowing that it is very unlikely that AB-281 will be passed? What is everyone else doing?

AB 281 was not intended to make expenses related to forgiven PPP loans deductible. It was only an “intent of the Legislature” bill:

SECTION 1. It is the intent of the Legislature to enact legislation that would bring California’s tax treatment of covered Paycheck Protection Program loans into conformity with federal tax laws.

It never passed. AB 80 was introduced, and it became the California law that outlined California taxation of PPP loans and related expenses.

dave829 wrote:AB 281 was not intended to make expenses related to forgiven PPP loans deductible. It was only an “intent of the Legislature” bill:

SECTION 1. It is the intent of the Legislature to enact legislation that would bring California’s tax treatment of covered Paycheck Protection Program loans into conformity with federal tax laws.

It never passed. AB 80 was introduced, and it became the California law that outlined California taxation of PPP loans and related expenses.

So AB-281 is dead in the water? Please forgive my ignorance, but how do we know this?

Yes, AB 281 is dead in the water. Even if it somehow passed, the legislature would have to pass additional legislation to satisfy the "intent of the Legislature." And this isn't going to happen given that AB 80 already addresses this issue.