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Hi waveheatin, thank you for posting the question.
The starting point of California Form 540 is with Federal Adjusted Gross Income (AGI) - Form 1040, line 11.
All the rental activities, current final year activities plus recognition of suspended losses, depreciation recapture from prior years are reflected on Schedule 1 Additional Income and Adjustments to Income, Part I, lines 4 and 5, the total of which flows to Form 1040, line 8, which is before Federal AGI.
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Hope this helps.
Thank you,
Kitty
Kitty,
Thank you for your response. Yes indeed the Federal AGI recapture the full amount of depreciation correctly. CA is based on the Federal AGI, and thus also recaptured the full amount of depreciation, but CA schedule adjusts (not allow) my loss by $5000. Essentially CA recaptured the $5000 depreciation but does not allow the same $500 as loss. So I am taxed by CA for the $5000 depreciation I am not allowed to deduct from my income in 2022.
Any suggestion?
Thanks again.
Frank
I am not completely familiar with California law. However, since Ca has a different depreciation regime (so does my state in certain situations) your CA tax basis should only be reduced by the depreciation CA allows and since this is less the Federal your CA gain should be reduced accordingly. not sure how Turbotax handles this.
may want to contact support unless others respond with directions
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