How to amend 2024 California Tax return to adjust for Business loss and intangible costs on Schedule K-1 investment in Oil and Gas exploration

[kashyapvijay]

California law does not allow the IRC Section 263(c) deduction for intangible drilling and development costs in the case of oil and gas wells paid or incurred on or after January 1, 2024. However, the Turbo tax online software is not making this adjustment for California tax return. I already filed 2024 tax returns and realized that if I do not pay additional tax amount to California by 04/15/2024 due to above adjustment, I will have pay penalty and interest on the in addition to the additional tax due. I tried amending 2024 tax return for California only in Turbo tax online software, but I do not know what K-1 schedule items I need to modify. To my understanding, there are two important items in schedule K-1, Business loss and intangible drilling and development costs. I will very much appreciate any help to address this problem. 

[PatriciaV]

To eliminate intangible drilling costs on an amended state return, you will need to manually adjust Lines 13d and 17f under the California K-1 adjustments topic. Find this from the page "Here's the income that California handles differently" under Business >> Partnership K-1.

The Federal column displays the full amount you deducted on your federal return. Enter zero in the California column for Line 13d and for Line 17f. Because net income from Schedule K-1 is calculated from all related categories, these are the only two items that need to be revised.

[kashyapvijay]

PatriciaV, Thanks for your response. Turbo Tax Premium online Amendment for State (California), I manually adjust Lines 13d and 17f under the California K-1 adjustments topic, but the Tax due amount for California (which gets reset to Zero, when the Amend of California return is began), stays Zero. I was expecting, it to go change to positive amount due because of the changes for California not allowing IDC and Business loss distributed by the oil exploration partnership deductions anymore. I am finding Turbo Tax Premium Online for Amendment of state tax is also not supporting correct calculation just like it is did for the pre amendment normal return I filed for California. If your instructions are for pre-amendment normal return, which I already filed for California and cannot go back and apply your instructions. I am planning to try to make adjustment in CA 540 for Partnership line item and also add AMT in form 540 line 61 as per the calculations in Schedule P (540) for California for AMT calculation which like a worksheet to determine if AMT is a non-zero positive amount or not and if so, are there any credits applicable to reduce it. In my case, I have no credits applicable to reduce AMT so I will just enter it as it as from Schedule P to form 540. Let me know if I misunderstood you or my planned steps are incorrect. Thanks.

[PatriciaV]

Sounds like you understand what to do.