Based on information available to NCACPA at this time, it appears highly unlikely that the North Carolina General Assembly will move forward with legislation to address deductibility of business expenses associated with a forgiven Paycheck Protection Program (PPP) loan.
State law excludes PPP loan forgiveness from taxable income for corporate and individual taxpayers but requires a state addback to adjusted gross income in the amount of any expenses associated with the forgiven loan that are deducted at the federal level.
As previously reported, Senators filed two bills this session to allow PPP expense deductibility at the state level. Neither SB 104 nor SB 112 has been scheduled for a vote since being referred to the Rules Committee. Fiscal notes have not been prepared for either bill, but legislators estimate it would cause a $400–$600 million revenue loss to the state treasury.
NCACPA has not taken a position on either bill, except to advise lawmakers that swift action on the measures would eliminate the uncertainty faced by tax professionals and taxpayers ahead of the March 15 filing deadline.
If you have questions about these issues, or other policy matters, please contact NCACPA Director of Advocacy Robert Broome, CAE.