Adjusting income of a business, farm, or rental for state law differences or source allocations: 1040 California (CA)

Show expandable text

New (tax) year, new help!

Fixed Assets and UltraTax CS 2023 help is now on Help and Support. We're still moving articles, but you can find most content for the 2023 tax year there. Continue using the Help & How-To Center for tax years 2022 and older.

Part-year and nonresident returns

The calculation of Schedules CA and CA (540NR) start with data entered in the federal  C, Rent, F, and 4835 screens. For part-year and nonresident returns, activities with postal code CA that are not allocated using the state allocation spreadsheet transfer 100 percent to California sources; activities with any other postal code transfer 0 percent to California sources. When data is entered in the state allocation spreadsheet, California Source amounts are calculated by multiplying the total income and total expenses by the Percent of federal allocated to state entered in federal Screen StCO with postal code CS (California Source).

Note: When the federal StCO screen with postal code CS is blank, amounts in the StCO screen with postal code CA will be used.

Also see the CAC, CARent, CAF, or CA4835 screens for further information regarding allocation and apportionment percentages. 

Depreciation

California depreciation adjustments automatically transfer from information entered in the asset module. Information transfers to the CADepr screen from the CA (California state tax) treatment for all assets. When amounts are forced in the federal input screen, 100 percent of the forced amounts entered is used for Total source calculations. For part-year and nonresident returns, depreciation expense is allocated to California source calculations using the entry in the Percent of federal allocated to state field in the StCO screen for the activity.

Note: California Schedule CA Reconciliation Report displays the income and expenses calculated by UltraTax CS. To adjust California net income for income or expense differences, use the field available in the state input screen for each activity. Adjustments made in these fields are included in all calculations, including Form 6198, At-Risk Limitations, and Form 3801, Passive Activity Loss Limitations.

Schedule R is available in the California Non Calculating folder to calculate the percentage to enter in the state allocation spreadsheet.

Was this article helpful?

Thank you for the feedback!