California state return

[briandsmith]

In schedule CA (NR) TT puts a large number in Section B, column C (additions) line 5 which has a huge effect on my taxes. Can anyone tell me where TT gets that number? In the interview TT shows it as "Rental or Royalty adjustment".

I have had a huge help from you experts and can never thank you enough. I am about ready to file. I feel I need to understand that number. The tax is about $3000. more than I think I should be paying for my sale.

[MaryK4]

This is usually caused by Passive loss carryovers. Beginning in 1994, for federal purposes only (not California), rental real estate activities of persons in the real estate business are not automatically treated as activities. California did not conform to this provision, so you may have had passive loss differences between federal and California in years since 1994, and therefore you may also have differences in passive loss carryovers for those years.

If this applies, go back to California and look for the screen below to make the adjustment.

[briandsmith]

Thanks for the response.

By carefully going through each form in the CA return I did find the source of the big positive number. It was indeed on the passive loss form. The way it was computed in TT was as follows:

I have two rental properties, the one I sold in CA and one I own here in Seattle.

Both are listed on the form.

The one in Seattle does run at a loss.

On the passive loss form, you are asked to subtract the loss from a small gain, giving the large number I have been concerned about. This number finds its way to an addition to my CA income.

To me, it seems wrong to take a Seattle generated loss and call it an addition to my California gross income.

I have used the interview generated questions to adjust the difference. The CA taxes now seem to me to be what I should pay. I still have to check it to see what TT has done with my corrections, but TT does not show any errors by what I have done.