Details of Public Law 117-6, section 2 , Extension of Covered Period for Paycheck Protection Program

For taxable years beginning on or after 1/1/2019, California partially conforms to the CARES Act and the CAA sections relating to:

Exclusions from gross income for PPP loan forgiveness,

The allowance of deductions for expenses paid with forgiven loan amounts not included in income under such sections, and

Allowing tax basis increases and not requiring tax attribute reduction as a result of those forgiven loan amounts being excluded from gross income.

However, these sections do not apply to ineligible entities, which are defined as:

A publicly-traded company, the securities of which are listed on a national securities exchange, and

An entity that does not meet the gross receipts requirement by demonstrating at least a 25 percent reduction in gross receipts in the first, second or third quarter of 2020 relative to the same 2019 quarter. Special rules apply to entities that were not in business during certain quarters in 2019.

California does not exclude from gross income PPP loans forgiven due to the extended covered period in this section.