Business & farm

Yes - Since the business was a sole proprietorship and has been closed, to avoid issues with the state of CA, go ahead and report the income as Miscellaneous Income, using the following steps:

1. Click on Federal > Wages & Income   
2. In the Less Common Income section , click on the Start/Update box next to Miscellaneous Income, 1099-A, 1099-C. 
3. On the Let's Work on Any Miscellaneous Income screen, click the Start/Update box next to Other reportable income.
4. On the screen, Any Other Taxable Income? click the Yes box. 
5.  On the next screen, Other Taxable Income, enter a description and the amount.  Click Continue. 
6. The amount entered will appear on line 7 of the 1040.