Rental Passive active losses are not carrying forward in CA after I sold my rental (previously carried forward)

[jh777]

In my Schedule E Wks CA forms it seems to not correctly bring in the carry forward active  losses from prior years once the rental is sold.  It seems that only this years loss is considered.

So the Active Summary Smart Work Sheet from last year shows the following:

This is this year's data:

I expected line G to be -59,030 and Line I would be -73,098.

Line A I expected to be -73,098 and line C to be 0.

Now I expect Form 1001 might explain why CA is not allowing the prior year carry forward FAL into this year, but I don't have access to it yet.  I could see this happening if the prior years losses are always reducing my CA taxes, but I'm not finding the prior years losses in any of the other forms or there is some other exclusion in the 1001 form that I'm not aware of yet.  It just isn't obvious how TT is handling it by looking at the worksheet and other forms. 

[jh777]

I’ll check back in the next day to see if others correct my understanding, but now that I received Form 1001 from the FTB it looks like carryover PALs are not allowed to offset the gains made during the sale of my rental.  The CA carryover PAL is only tracked to offset the federal return carryover PALs.   I wish I had known about this ahead of time to prepare for the tax consequences (like maybe paying off my loan to avoid the carryovers)   Hopefully someone has a better answer.  CA taxes are 💩

[jh777]

I was hoping an expert could reply and say my prior reply is correct and that's it or there is a way to still recover the prior PALs in CA after selling all my rentals.  I'm also curious if the prior CA PALs could be recovered if I re-entered the rental market but made a profit each year instead of further losses or once you have a CA PAL it is lost for good unless it can be used against a gain in that same year.

[HopeS]

Please try using the "Step by Step" screen in California State return, you should be able the add additional California passive activity loss to my California return, You will come to the question "any section 179, passive or At-Risk Loss carryovers?" which is embedded in the Rental and Royalty Summary section. Once you update this screen review California Form 3801.

Also, review this link for more information

@jh777 

[jh777]

@HopeS I originally got an error when I did this in TT many days ago, so I assumed this section was only for Section 179 related losses.  I tried it again it worked.  I don't know why this is not handled automatically in CA like it is in Federal.  Thanks for your suggestion.

I looks like I'll save about 10K due to this and another stupid error I found.  Too bad I filed before your answer arrived.

So off I went to update and amend, yet amend does not seem to be working.  Off to file another ticket.