Under "California Revenue and Taxation Code Section 17561" California follows basically IRS section 469
c)?Section 469(g)(1)(A) of the Internal Revenue Code is modified to provide that if all gain or loss realized on the disposition of the taxpayer's entire interest in any passive activity (or former passive activity) is recognized, the excess of-
(1)?The sum of-
(A)?Any loss from that activity for that taxable year (determined after application of Section 469(b) of the Internal Revenue Code), plus
(B)?Any loss realized on that disposition, over
(2)?Net income or gain for the taxable year from all passive activities (determined without regard to losses described in paragraph (1)),
shall be treated as a loss which is not from a passive activity.
http://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-sect-17561.html#sthash.zmatv8Jh.dpuf
However with the peculiarity of California's law the advice of a qualified CPA would maximizes your benefit and ensure conformity with the state code.
