I think I've condensed it down to this. Does this make sense to everyone and explain it more coherently? @sergiorate @DoninGA
California does not tax unemployment. First California is subtracting the whole unemployment amount on 540 CA line 7. Not just the taxable amount from the Federal. Then it has to ADD back in the 10,200 excluded amount on line 8 so it is only subtracting out the taxable amount from the Federal AGI.
