Four areas of CA-federal tax conflict.

The Four CA-Federal Conflict Areas

TCJANon-ConformityCreditsCA-SpecificEntitiesDifferent TreatmentBasisPassive/Basis

CA fed.
Area Difference2
TCJA Non-Conformity SALT cap, QBI, bonus deprec.
CA Credits Renter’s credit, others
Entity Treatment LLC vs. corp tax
Basis / Passive CA-specific adjustments

Quick Reference

Jump to: TCJA, credits, entities, or basis.

1. TCJA Non-Conformity

CA didn’t conform to many 2017 TCJA changes.

If this is you: Federal return with TCJA items. CA may not allow QBI deduction, may not conform to bonus depreciation, different SALT treatment. Adjustments on Schedule CA.

TCJA Non-Conformity Strategy

  1. Identify TCJA items on federal.
  2. Check CA conformity status.
  3. Make Schedule CA adjustments.
  4. Document differences.
  5. Track multi-year effects.

2. CA-Specific Credits

CA renter’s credit, research credit variations, others.

If this is you: CA taxpayer. CA-specific credits not on federal. Research credit calculation differences. Competitive credits for businesses.

3. Entity Treatment Differences

LLC gross receipts fee, S-corp 1.5% tax, other entity differences.

If this is you: Business entity. CA LLC pays gross receipts fee (up to $11,790). CA S-corp pays 1.5% entity-level tax. Federal treats differently.

4. Basis and Passive Activity

CA-specific basis and PAL adjustments.

If this is you: Passive investor or shareholder. CA basis may differ from federal. Passive activity losses tracked separately. Multi-year reconciliation required.

CA-federal conflict? Book consultation.

CA-Federal Lookup

CA fed docs.
Area CA Authority
Conformity / Non-conformity CA RTC + FTB guidance
Schedule CA Federal/CA adjustments
CA credits FTB Publication 1001
CA entity tax RTC §23802 (S-corp 1.5%)
LLC fee RTC §17942

CA-Federal Statute

  • CA FTB: 4-year statute.
  • Federal changes trigger CA amended returns.
  • 90-day window for reporting federal changes.

CA-Federal Patterns

CA-fed outcomes. Source: Brotman Law practice.
Situation Outcome
Proper Schedule CA Clean reporting
Federal-only preparer Filing errors
Federal audit adjustments CA amendment required
Non-conformity missed CA underpayment

CA-Federal Audit

Federal Adjustments

Reported to FTB within 90 days.

CA Amendment

Schedule CA changes.

Assessment

CA back-tax if applicable.

First 48 Hours

  1. Review prior CA returns.
  2. Identify non-conformity items.
  3. Check Schedule CA adjustments.
  4. Reconcile to federal.
  5. Engage CA specialist.

★Brotman Law handles CA-federal tax conflicts. Based in San Diego.

The ROI Question

Proper CA-federal reconciliation saves significant tax. Professional CA-specific review pays for itself.

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When to Engage

  • Complex CA-federal differences.
  • Federal audit affecting CA.
  • Non-CA-specialist preparer.
  • Multi-year amendments.

CA-federal conflict?

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