Thank you CalCountry for the thorough and detailed answer. That was very helpful. So from what I read is that the gain made on the sale of the personal residence that falls under the exemption rules of the Federal Tax Code will not make it across to the California Tax Form thus the gain will not be taxed. However, any gain that is not exempt by the Federal exemption (therefore getting taxed Federally) will also make it to the California Tax Form and thus be taxed as a Capital Gain (i.e. income tax) in the state of California. Am I understanding this correctly?
