MA Clarifies 2020 Tax Treatment of PPP Income, EIDL Grants, & SBA Debt Relief Subsidies

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MA Clarifies 2020 Tax Treatment of PPP Income, EIDL Grants, & SBA Debt Relief Subsidies

On April 1, 2021, the Commonwealth of Massachusetts passed amendments to House bill No. 89, An Act Financing a Program for Improvements to the Unemployment Insurance Trust Fund and Providing Relief to Employers and Workers in the Commonwealth. The amended legislation outlines Massachusetts’ tax treatment of Paycheck Protection Program (PPP) income, Economic Injury Disaster Loan (EIDL) grants, and SBA debt relief subsidies for the taxable year beginning January 1, 2020. 

The legislation clarifies tax treatment for Massachusetts personal income taxpayers (which includes unincorporated businesses reporting on Schedule C, partners in a partnership, and individual shareholders of an S corporation) and Massachusetts corporate excise taxpayers. 

PPP Loans

  • Massachusetts personal income taxpayers may exclude PPP loan forgiveness from gross income for 2020.  
  • Massachusetts corporate excise taxpayers may exclude PPP loan forgiveness from Massachusetts gross income for 2020.
  • If your expenses paid with your PPP loan are deductible on your federal return (personal or corporate), they may also be deducted on your Massachusetts return.

EIDL Grants (Advances)

  • Massachusetts personal income taxpayers may exclude EIDL grants from gross income for 2020. 
  • Massachusetts corporate excise taxpayers may exclude EIDL grants from gross income for 2020.
  • If your expenses paid with your EIDL grants are deductible on your federal return (personal or corporate), they may also be deducted on your MA return. 

SBA Debt Relief Subsidies

  • Massachusetts personal income taxpayers may exclude debt relief subsidies from gross income for 2020. 
  • Massachusetts corporate excise taxpayers may exclude debt relief subsidies from gross income for 2020.
  • If your expenses paid with debt relief subsidies are deductible on your federal return (personal or corporate), they may also be deducted on your MA return. 

Massachusetts Growth Capital Corporation (MGCC) Grants

  • Businesses that received a grant through the MGCC must include the grant amount in gross income.
  • If your expenses paid with grant funds are deductible on your federal return (personal or corporate), they may also be deducted on your MA return. 

Additional Resources 

MA Tax Filing Season FAQ

Check out other recent ARB insights:

American Rescue Plan Act of 2021: What Business Taxpayers Need to Know

Congress Passes the PPP Extension Act of 2021

IRS Guidance & Resources for Claiming the Employee Retention Credit

Contact ARB

If you have questions, contact me today. Visit our COVID-19 Financial Resource and Tax Center for information on related matters. 

by Dan Doiron, CPA, CVA

Dan Doiron has been in public accounting since his college internship with ARB in 1986. He has been a Principal since 1996 and works extensively with all types of clients to solve their compliance and tax planning issues. Dan was the May 1987 State of Maine Gold Medalist for earning the highest scores on all four parts of the CPA Examination. He is the Practice Leader of both ARB’s Business Tax Services Team and ARB’s Private Client Advisory Services Team.

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