Investors & landlords

It is not unusual for the California carryover amount to be the same as the Federal carryover amount. However, you should still check, because they could be different.

From the in-program explanation link on the California Capital Loss Carryover screen:

How do I know if I have a different capital loss carryover for California?

There are a few differences between California and federal law regarding the treatment of Capital Gains or Losses. See below for a few examples of when California law differs and requires an adjustment to account for these differences:

- Capital assets - The TCJA amended IRC Section 1221 excluding a patent, invention, model or design (whether or not patented), and a secret formula or process held by the taxpayer who created the property (and certain other taxpayers) from the definition of a capital asset. California does not conform. Report your capital assets on Schedule D (540 or 540NR), California Capital Gain or Loss Adjustment, and figure the adjustment to make on Schedule CA (540 or 540NR).

- Deferral and exclusion of capital gains in qualified opportunity zone funds - The TCJA established Opportunity Zones. IRC Sections 1400Z-1 and 1400Z-2 provide a deferral of inclusion of gross income for capital gains reinvested or invested in a qualified opportunity zone fund and exclude capital gains from the sale or exchange of an investment of such funds. California does not conform. For federal purposes, the capital gains deferred as a result of reinvesting or investing are included in gross income in the year of sale or disposition of the investment. California does not conform. Use California Schedule D (540 or 540NR) if you claim the federal IRC Sections 1400Z-1 and 1400Z-2 on your federal return. Enter the entire gain realized on line 1, column (e). If, for California purposes, gains from investment in qualified opportunity zone property had been included in income during previous taxable years, do not include the gain in the current year income.

- Gain on sale or disposition of a qualified assisted housing development to low-income residents or to specified entities who maintain housing for low-income residents - Federal law does not allow special treatment on gains related to the sale of certain assisted housing. California law permits the deferral of such gain, under certain conditions, if the proceeds are reinvested in residential real property (other than a personal residence) within two years of the sale. Enter the transaction on California Schedule D (540 or 540NR), line 1. In column (e) enter "-0- R & TC Section 18041.5." Reduce the basis of replacement property by the gain deferred. Attach a schedule to your return reflecting computation of basis in the replacement property, or a statement of intent to replace within the replacement period.

- Gain on sale of personal residence - For sale or exchanges after May 6, 1997, federal law allows an exclusion of gain on the sale of a personal residence in the amount of $250,000 ($500,000 if married filing jointly). The taxpayer must have owned and occupied the residence as a principal residence for at least 2 of the 5 years before the sale. California conforms to this provision. However, California taxpayers who served in the Peace Corps during the 5 year period ending on the date of the sale may reduce the 2 year period by the period of service, not to exceed 18 months. If there is a difference between the amounts excluded (or depreciated, if recapture applies) for federal and California, complete California Schedule D (540 or 540NR). Transfer the amount from California Schedule D, line 12a, to Schedule CA (540), Part I, Section A or Schedule CA (540NR), Part II, Section A, line 7, column B (if gain is less than federal). Transfer the amount from California Schedule D, line 12b, to Schedule CA (540), Part I, Section A or Schedule CA (540NR), Part II, Section A, line 7, column C (if gain is more than federal).

- Undistributed capital gains for regulated investment company (RIC) shareholders - Federal law requires certain undistributed capital gains reported on federal Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, to be included in the gross income of the mutual fund shareholder and allows a tax credit for the capital gains tax paid by the RIC. California has no similar provision. Do not enter the amount of undistributed capital gains on California Schedule D (540 or 540NR).

- Gain or loss on sale of property inherited before January 1, 1987 - Federal gain or loss may differ from the California gain or loss due to differences in the basis of property. For property inherited on or after January 1, 1987, the California basis and the federal basis are the same. Report the amount of California capital gains and losses on California Schedule D (540 or 540NR).

- Capital loss carrybacks - Federal law allows a deduction for carrybacks of certain capital losses. California has no similar provision. Report the amount of California capital gains and losses on California Schedule D (540 or 540NR).

- Exclusion of deferral and gain on the sale of qualified small business stock - Federal law allows deferral and exclusion under IRC Section 1045 and IRC Section 1202 of the gain on sale of qualifying small business stock, that was held for more than five years. California does not conform. Use California Schedule D (540 or 540NR) if you claim the federal IRC Section 1045 deferral or IRC Section 1202 exclusion on your federal return. Enter the entire gain realized on Schedule D (540 or 540NR), line 1, column (e).

@d7knight @mc510