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Hawaii nondeductible expenses related to a forgiven PPP loan in S-Corp

JLA - Kauai
Level 1

As of today 4/19 Lacerte has not updated Screen 13 to allow entry of nondeductible expenses related to a forgiven PPP loan.  I cannot enter a deduction and have it source only to the state. Any suggestions on a work-around?  

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14 Comments 14
TylorValdez1
Employee
Employee

That entry field is only for states that do not conform to the Consolidated Appropriations Act (P.L. 116-260), signed into law on December 27, 2020. Hawaii does conform. https://files.hawaii.gov/tax/legal/tir/tir20-06_rev.pdf

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JLA - Kauai
Level 1

Aloha,

The problem is the non-deductibility of the expenses.

Per Hawaii Dept of Taxation 

https://tax.hawaii.gov/upd_4txpayr/

 

Adoption of Federal Tax Provisions

We are unable to provide any definitive guidance on conforming to the federal provisions until the Legislature successfully passes legislation. This would include:

  • Provisions for the exemption of the first $10,200 of unemployment compensation
  • Allowing PPP expenditures to be deductible when the PPP loan was forgiven

Any bill passed by the Hawaii State Legislature automatically becomes law by July 6th with or without the Governor’s signature, provided the Governor does not veto the bill.

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TylorValdez1
Employee
Employee

All you need to do is enter deductions like you traditionally would on screen 15. No other entries are required as far a sourcing goes for HI.

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JLA - Kauai
Level 1

Tylor,

Taxpayer has a forgiven PPP of 100,000 and total payroll of 160,000.

If the fed deduction for payroll is 160,00 (the entire amount) and the state deduction is only 60,00  where do you enter the state amount? 

 

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JLA - Kauai
Level 1

Tylor can you please respond to this?

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TylorValdez1
Employee
Employee

There is no way to adjust. File the return as is and amend if the law changes.

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JLA - Kauai
Level 1

The law currently says the expenses are NOT deductible.  So the return is incorrect.

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TylorValdez1
Employee
Employee

I just found out our development team is working for a fix to add a new input field for Hi returns. I will repost when it is confirm to be released in the software.

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TylorValdez1
Employee
Employee

Update is out. You may now enter non deductible expenses in on screen 10 to effect the HI return.

JLA - Kauai
Level 1

Mahalo!

 

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JLA - Kauai
Level 1

Hawaii expenses nondeductable to state related to a forgiven PPP loan - this was an issue for usfor the 2020 tax returns and was not corrected until May 2021.  I see it is again not addressed in the current version of the 1120S.  When can we expect that this will be corrected?

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randyrcpa
Level 1

Any updates on the PPP Nondeductible expense S-corp module entry screen issue in the 2021 program?

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randyrcpa
Level 1

HI Tyler- Any updates on the PPP Nondeductible expense S-corp module entry screen issue in the 2021 program?

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cpa9
Level 1

I have called twice about this and it's still not fixed.   I'm holding several S Corp returns, waiting for the update.

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