To get technical in case it will help provide more clarity.
Did I earn income in California?
No, you did not. That's because rental income is not earned. Rental income is passive income.
However, there is no denying that you do have "California sourced" income. Therefore you're required to report that income to the state.
Now in reality it's more likely you have a loss "ON PAPER" on the tax return. But that doesn't matter really. In order to show that loss "on paper", you have to file a tax return.
Simplistic and not all inclusive. But not wrong either.
