California Schedule CA starts with Federal Adjusted Gross Income and then shows additions and subtractions from that amount based on differences in California law.
If your loss is being added back on the California Schedule CA, in the situation you described, it appears to be because California does not conform to federal law (IRC §1202) that allows for the exclusion of gain on certain Qualified Small Business Stock, meaning 100% of the gain on such stock is taxable in California.
See the California Instructions for Capital Gain or Loss Adjustment for more information.
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