I do not have an Other Tax-Exempt Income Smart Worksheet for form 1120S and line 16(a) on page 4 is for tax exempt interest. It seems it should be entered on line 16(b) which can be entered on Schedule M-1 Items Worksheet. My question concerns California form 100S since it seems the EIDL grant is taxable in California. Unless I override line 5b on Schedule M-1 -- Reconciliation of Income (Loss) per Books Income (Loss) per Return, which is populated from Federal Form 1120S Schedule M-1 I am out of balance by the amount of the EIDL grant. Am I correct in overriding that amount?
