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California Tax Law Changes Await Governor’s Signature

Governor Newsom is expected to sign SB 113 soon, which contains several tax-related changes that impact 2021 tax returns and the current filing season.

Expansion of the Pass-through Entity (PTE) Tax for Additional Relief from State and Local Tax (SALT) Deduction Limits In 2021, California established an elective PTE tax framework to allow certain California taxpayers to pay their California personal income tax in a way that provides relief from the current $10,000 federal limit on individual SALT deductions. While implementing the new framework, limitations were identified that would prevent taxpayers from realizing the full intended benefit of the PTE tax and subsequent credit. SB 113 address some of these issues:

For taxable years on or after Jan. 1, 2021:
- Clarification that a taxpayer can apply the full PTE credit against their California tax liability as originally intended without limitation due to tentative minimum tax.
- Expansion of eligible taxpayers to include tiered partnerships and those that own their share of a business through a disregarded entity, such as a single-member LLC.
- Clarify that PTE tax provisions can apply to guaranteed payments as part of the distributive share of net income from an entity.

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By Linkenheimer LLP|2022-02-08T23:50:01+00:00February 8th, 2022|CA tax, california, New Tax Laws, ppp|0 Comments

California Tax Updates for 4/21

Update 1:

Employers in California who have questions about the Paycheck Protection Program (PPP) get some answers. The April edition of the CA Franchise Tax Board’s “Tax News” addresses whether CA will conform to the federal rules with respect to the PPP, which is part of the CARES Act. The Tax Board said that while income from PPP loan forgiveness is excluded for CA 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. If other changes in CA law related to the PPP arise, the Tax Board will present the new information in its “Tax News.” Here’s more: https://bit.ly/2QsCO19

Update 2:

The 2020 tax year has brought changes to many California tax forms and instructions. That’s why the CA Franchise Tax Board (FTB) has created a tax forms webpage to describe the revisions it has made. Most of the […]

By Linkenheimer LLP|2021-04-21T23:34:09+00:00April 21st, 2021|business, ca, CA tax, california|0 Comments

PPP Video Updates with Kelly McGlinchy from Linkenheimer LLP

Learn more about what is happening in regards to PPP loans, forgiveness and other updates with Kelly from Linkenheimer. If you have questions, please contact your Linkenheimer CPA.

By Linkenheimer LLP|2021-03-12T18:07:19+00:00March 10th, 2021|New Tax Laws, ppp|0 Comments

PPP Adjusted to Prioritize Very Small Businesses

When the Small Business Administration (SBA) launched the Paycheck Protection Program (PPP) last year, the program’s stated objective was “to provide a direct incentive for small businesses to keep their workers on the payroll.” However, according to federal officials, the recently issued second round of funding has distributed only a small percentage of the $15 billion set aside for small businesses and low- to moderate-income “first-draw” borrowers.

In late February, the SBA, in cooperation with the Biden Administration, announced adjustments to the PPP aimed at “increasing access and much-needed aid to Main Street businesses that anchor our neighborhoods and help families build wealth,” according to SBA Senior Advisor Michael Roth.

5 primary objectives

The adjustments address five primary objectives:

1. Move the smallest businesses to the front of the line. The SBA has established a two-week exclusive application period for businesses and nonprofits with fewer than 20 employees. It began on […]

By Linkenheimer LLP|2021-03-03T19:31:15+00:00March 3rd, 2021|cares act, New Tax Laws, ppp|0 Comments

Partial Conformity to PPP Loan Tax Rules for California

Yesterday, Governor Gavin Newsom, Senate President pro Tempore Toni G. Atkins and Assembly Speaker Anthony Rendon announced that they have reached an agreement on a package of immediate actions that will speed needed relief to individuals, families and businesses suffering the most significant economic hardship from the COVID-19 Recession.

The package includes an agreement to partially conform California’s tax law to the new federal tax treatment for loans provided through the Paycheck Protection Plan (PPP). More than 750,000 PPP loans were taken out by California small businesses. The agreement allows companies to deduct up to $150,000 in expenses covered by the PPP loan. All businesses that took out loans of $150,000 or less would be able to maximize their deduction for state purposes. Larger firms that took out higher loans would still be subject to the same ceiling of $150,000 in deductibility.

This tax treatment would also extend to the Economic Injury Disaster Loans.

While the legislative language has yet to be published, this package is expected to be part of an early budget action that is quickly passed and signed by the governor. Similar proposals have emerged in the Legislature, namely AB 281 (Burke), […]

By Linkenheimer LLP|2021-02-18T22:32:01+00:00February 18th, 2021|ca, CA tax, california, New Tax Laws, ppp|0 Comments