Foreign Tax Credit - California difference

[Jim Aitken]

The IRS allows me to treat a foreign tax that I paid as either a Credit, or a Deduction.  Taking the credit is clearly better from a federal tax perspective, but in doing this I lose the ability to have it recognized in my California Sate return because CA does not allow such credits.  My question is: Can I enter the foreign item as an expense on my state return while keeping it as a credit on  my federal return?

Example.

Sale of a Canadian rental property for $1.3M  Canadian withholding tax approx. $300K.

• Claiming the foreign tax as a credit results in Federal tax = $25K, CA state tax = $120K
• Claiming the foreign tax as a deduction results in Federal tax = 241K, and State tax = 87K

Best case would be to have the federal tax as a credit and the state tax as a deduction.

If this is allowed, how can I modify my state return (in Turbotax) since it draws data from the federal data.

Thanks for any advice.

[DaveF1006]

To my knowledge, California does not allow a foreign tax credit or deduction. This is strictly a federal deduction or credit.

[Jim Aitken]

If I choose to enter the foreign tax as an expense on  my federal form it automatically carries over to my California return as a "state and local" tax. Does this mean that TT is in error by allowing it?