Can I include in the "sales expenses" of my home the CA withholding tax that I paid at closing?

No. CA withholding tax on the sale of your home is the amount expected to cover any tax liability that may arise from that sale. The following are a list of sales expenses that will reduce the profit made on the sale of your home:

• Commissions
• Legal fees
• Broker fees
• Appraisal fees
• Advertising fees
• Home inspection reports
• Owner's title insurance
• Transfer taxes
• Geological surveys
• Any amounts the buyer agrees to pay for the seller, such as loan charges (points) or other fees paid on the buyer's behalf

Sales expenses do not include:

• Mortgage payoffs
• Home equity loan payoffs
• Rent-back costs
• Payoff to creditors
• HOA fees
• Property taxes

As a reference please see:

Sale of your home IRS – Topic 701

Selling your home IRS – Pub 523

Thanks!