PPP Loans and Reporting on Schedule C

[ptrost]

I'm aware that PPP loans are not taxable if they are forgiven for both Federal and CA; however, do you still have to show the income on the Schedule C and make a negative adjustment for the forgiven loan amount on the Schedule C? Also, I know that you can include all expenses for Federal purposes, but CA is not allowing the expenses (minus payroll) at this time that are attributable to the business for a sole proprietor. I know there is a CA bill that will hopefully be passed where CA will conform to the Federal law. I'm just wondering how everyone in the community is handling these PPP loans for Schedule C filers. I'm thinking perhaps not putting the income on the tax return. 

Thanks

[Skylane]

It was a loan,  not income.

[sjrcpa]

Yes, but once it is forgiven it is nontaxable income.

I haven't had any Sch C PPP loans forgiven in 2020. But I would not put them on the Sch C.

For CA, I'd wait until they make up their mind, but prepare the client for the worst case-that the amount of the PPP loan is an addback to CA income.

[ptrost]

I did have a client receive loan forgiveness on the PPP loan. It is my understanding from the research I have done that the PPP loan forgiveness is not included as CA income. We are just waiting to see if CA  will conform with the Federal government on allowing the expense deductions.