On your California return in TurboTax Desktop (TTD) you need to make a manual adjustment, since CA no longer allows the IDC deduction starting with costs incurred in 2024.
Here’s how:
1. Go to your CA state return in TTD.
2. Open Schedule CA (540).
3. In the “Additions” section, enter the IDC amount that flowed from your federal K-1.
4. This adds the deduction back to income for CA purposes (so you only get the benefit federally).
That’s it—the key is IDC is fully deductible on the federal return, but must be added back on the CA return.
If you let TurboTax do it automatically, it will usually leave the deduction in place for CA, which is incorrect - you have to adjust it yourself.
