@wsrsm2002 wrote: "It seems that the way IRS vs. CA FTB view the income is different."
Not so. A sole proprietor and a single-member LLC (unless it has elected to be taxed as a corporation) each reports its business income on the federal Schedule C.
Since the CA tax return (CA Form 540) starts with the federal adjusted income, the Schedule C income is already accounted for on the state return.
Also, note that CA requires sole proprietors to report their 1099 income as business income on the federal Schedule C.
https://www.ftb.ca.gov/file/business/types/sole-proprietorship.html
You don't have an income tax issue; you have a California business (LLC) tax issue.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
