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If you received a grant/loan in 2020 and it was forgiven in a prior year, then it doesn't affect your 2023 California return.

California conformed to many of the COVID provisions, with some exceptions. See this FTB webpage for a comprehensive list of Federal-California statutes from 2020-2022 and where California does/doesn't conform.

Regarding the EIDL provisions, the document states:

California conforms to IRC section 61, as of the specified date of 1/1/2015, with modifications. California does not conform to IRC section 265, regarding expenses and interest relating to tax-exempt income, but instead has stand-alone language that disallows certain deductions related to tax-exempt income.

For taxable years beginning on or after 1/1/2019, California amended sections 17131.8 and 24308.6 (AB 1577 Stats. 2020 Ch. 39 and AB 80 Stats. 2021 Ch. 17) to partially conform to the CARES Act and the CAA relating to:

• Exclusions from gross income for PPP loan forgiveness and certain EIDL loan forgiveness,
• The allowance of deductions for expenses paid with the forgiven loan amounts not included in income under such sections, and
• The allowance of tax basis increases and not requiring tax attribute reduction as a result of those forgiven loan amounts being excluded from gross income.

For PPP loans forgiven, 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.

Taxpayers with loans forgiven under the Economic Injury Disaster Loan (EIDL) Grant or Targeted EIDL Advance, are not required to meet these qualifications to deduct expenses.