Yep, you’re seeing a real gap in TurboTax. California killed the IDC deduction starting 2024, but TurboTax Premier online hasn’t updated the logic - so it still flows the federal IDC loss straight into the CA return. The fix is manual: on Schedule CA (540) you need to add the IDC back to income so it doesn’t reduce your CA taxable amount. If you’ve already filed, you’ll need to amend. No workaround in the software right now other than doing the manual adjustment or having a tax pro prep the CA return.
The IDC deduction still works great at the federal level, giving you a big first-year write-off against W2 income.
