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Screen CAAdj - California Adjustments (1120)
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Adjustments
The application uses information in this section to calculate the correct adjusted total tax on Side 2 of Form 100, Form 100W, or Form 100S. Several of the amounts needed for Sides 1 and 2 are transferred directly to the state form from the federal. Enter only the appropriate additional information.
note
For S Corporations, these adjustments are only for the corporate income on Sides 1 and 2. Enter adjustments for Schedule K in the CAK screen in the Shr Allocation folder.
Other income taxes / California income taxes
The application transfers amounts from the
Taxes & licenses
statement in the federal Inc or H screens to the statement attached here. You can open this statement from the Other income taxes
field. The application uses the amounts in the statement to complete Schedule A of Form 100, 100W, or 199 (for homeowners’ associations), as well as the state adjustment on Side 1 of Form 100, Form 100W, or Form 100S. For S Corporations, the application transfers specified other income taxes to the Other AMT items line of Schedule K.In the statement attached to the
Other income taxes
field, enter a location code from the following table or select from the dropdown in any location field.For a C Corporation or Homeowners’ Association:
Location Code | Description | Destination | ||||||
|---|---|---|---|---|---|---|---|---|
For an S Corporation:
Location Code | Description | Destination |
|---|---|---|
C | California income taxes | Form 100S, Side 1, line 2 Form 100S, Schedule K, line 1 |
O | Other income taxes | Form 100S, Side 1, line 2, Foreign or domestic tax |
K | Other income taxes and Schedule K credit | Form 100S, Side 1, line 2, Foreign or domestic tax Form 100S, Schedule K, line 1 and line 18e |
Other additions
For a C Corporation
The application transfers the following amounts from Page 1 of the federal return to the statement attached here.
- Contributions deducted in arriving at federal taxable income
- Federal casualty or theft losses from income-producing property
- Net loss from federal Form 4797
- Extraterritorial income from Other Deductions on federal Form 1120
- Domestic Production Activity Deduction from federal Form 1120
- Capitalized orphan drug credit from Other Deductions on federal Form 1120
- Capitalized research credit from Other Deductions on federal Form 1120
- Cancellation of debt income deferred under Section 108(i)
- Accelerated reporting of OID deferred deduction under Section 108(i)(5)(D)
- Unallowed Credits to Holders of Tax Credit Bonds from Other Deductions on federal Form 1120
- Prior-year Unallowed Credits to Holders of Tax Credit Bonds from Other Deductions on federal Form 1120
- Section 108(i) Income
- Section 108(i) Deferred Income
Amounts in this statement are included in a supporting statement for the Other additions line on Side 1 of the return. To exclude an item from the state return, delete the amount or the entire line item from the statement. The application displays the modified column in black and will not overwrite this new data with subsequent federal-to-state data transfers. For more information, (including details on setting a user preference to mark fields for which you overruled the transferred amount), see the Statements overview.
note
If electronic filing, you must delete the entire line rather than deleting only the amount.
Also included in the printed supporting statement are calculated amounts as follows; use the CAStmtC screen if necessary to adjust these amounts.
- California gains from Schedule D-1
- Exempt function expenses if filing federal Form 1120 and California is marked as exempt under R&TC Section 23701t on the CAH screen. This is calculated using the difference between federal Form 1120-H, Association’s Total Expenditures for the Tax Year and Total Deductions
- Exempt function income if filing federal Form 1120-H and California isnotmarked as exempt under R&TC Section 23701t on the CAH screen. This is the amount from federal Form 1120-H, Total Exempt Function Income
- Other income entered from a K-1 pass-through activity
- Adjustments for passive activity losses and at-risk amounts
- Enterprise Zone hiring credit from Form 3805Z
- LAMBRA hiring credit from Form 3807
For an S Corporation
The application transfers the following amounts from Page 1 of the federal return to the statement attached here.- Net loss from federal Form 4797
- Capitalized orphan drug credit from Other Deduction on federal Form 1120S
- Capitalized research credit from Other Deductions on federal Form 1120
- Cancellation of debt income deferred under Section 108(i)
- Accelerated reporting of OID deferred deduction under Section 108(i)(5)(D)
- Section 108(i) Deferred Income
Amounts in this statement are included in a supporting statement for the Other additions line on Side 1 of the return. To exclude an item from the state return, delete the amount or the entire line item from the statement. The application displays the modified column in black and will not overwrite this new data with subsequent federal-to-state data transfers. For more information, (including details on setting a user preference to mark fields for which you overruled the transferred amount), see the Statements overview.
note
If electronic filing, you must delete the entire line rather than deleting only the amount.
Also included in the printed supporting statement are calculated amounts as follows; use the CAStmtS screen if necessary to adjust these amounts.
- California gains from Schedule D-1
- Other income entered from a K-1 pass-through activity
- Adjustments for passive activity losses and at-risk amounts
- CA Rental Depreciation adjustment
- Enterprise Zone hiring credit from Form 3805Z
- Farm rental income
- Federal Built-In Gains Tax - Ordinary Income
- Federal Oil/Gas Depreciation
- LAMBRA hiring credit from Form 3807
- Pass Through Adjustment
- Pass Through Other Income
- Pass Through Other Rents
- Pass Through Rents
- Pass Through Royalty Income
- Section 179 Sales Ordinary Gain
- Section 179 Sales Capital Gain/Loss
- Rental Income
- CA Research Credit from Form 3523
- Royalty Income
note
For S Corporations, these adjustments are only for the corporate income on Sides 1 and 2. Enter adjustments for Schedule K in the CAK screen in the Shr Allocation folder.
If electronic filing, you must delete the entire line rather than deleting only the amount.
Contributions (C Corp)
Enter any adjustments to the federally transferred information in this statement. The application transfers amounts from the statement attached to
Contributions (C Corp)
in the federal Inc screen. Amounts in this statement are included on Form 100 or Form 100W, Side 2, Contributions line.To exclude an item from the state return, delete the amount or the entire line item from the statement. The application displays the modified column in black and will not overwrite this new data with subsequent federal-to-state data transfers. For more information, (including details on setting a user preference to mark fields for which you overruled the transferred amount), see the Statements overview.
note
If the return is being electronically filed, you must delete the entire line rather than deleting only the amount.
Other deductions
For a C Corporation
The application transfers the following amounts from Page 1 of the federal return to the statement attached here.- Net gain from federal Form 4797
- Disabled access credit from Other Deductions on federal Form 1120
- Employer childcare credit from Other Deductions on federal Form 1120
- Employer pension plan credit from Other Deductions on federal Form 1120
- Employer tips credit reduction from Taxes and Licenses on federal Form 1120
- Employment credit wages from Salaries and Wages on federal Form 1120
- Energy efficient home credit from Other Deductions on federal Form 1120
- Federal research credit from Other Deductions on federal Form 1120
- Income from Alcohol Fuel Credit from Other Income on federal Form 1120
- Income from Biodiesel and Renewable Diesel Fuels Credit from Other Income on federal Form 1120
- Low sulfur diesel fuel production credit from Other Deductions on federal Form 1120
- Orphan drug credit from Other Deductions on federal Form 1120
- Small employer health insurance premiums credit reduction from Employee Benefit Programs on federal Form 1120
- Accelerated reporting of cancellation of debt income deferred under Section 108(i)(5)(D)
- OID deferred deduction under Section 108(i)
- Credit to Holders of Tax Credit Bonds from Other Income on federal Form 1120
- Section 179 recapture from Other Income on federal Form 1120
- Section 280F recapture from Other Income on federal Form 1120
- Section 108(i) Expense
- Section 108(i) Deferred Expense
Amounts in this statement are included in a supporting statement for the Other deductions line on Side 2 of the return. To exclude an item from the state return, delete the amount or the entire line item from the statement. The application displays the modified column in black and will not overwrite this new data with subsequent federal-to-state data transfers. For more information, (including details on setting a user preference to mark fields for which you overruled the transferred amount), see the Statements overview.
note
If electronic filing, you must delete the entire line rather than deleting only the amount.
Also included in the printed supporting statement are calculated amounts for the following; use the CAStmtC screen if necessary to adjust these amounts.
- Other losses entered from a K-1 pass-through activity
- Adjustments for passive activity losses and at-risk amounts
- California casualty or theft losses from income-producing property
- California losses from Schedule D-1
- Interest on government obligations if an income tax filer
- Exempt function income if filing federal Form 1120 and California is marked as exempt under R&TC Section 23701t on the CAH screen. This is calculated using the amount from federal Form 1120-H, Total Exempt Function Income
- Exempt function expenses if filing federal Form 1120-H and California isnotmarked as exempt under R&TC Section 23701t on the CAH screen. This is calculated using the difference between federal Form 1120-H, Association’s Total Expenditures for the Tax Year and Total Deductions
For an S Corporation
The application transfers the following amounts from Page 1 of the federal return to the statement attached here.- Net gain from federal Form 4797
- Disabled access credit from Other Deductions on federal Form 1120S
- Employer childcare credit from Other Deductions on federal Form 1120S
- Employer pension plan credit from Other Deductions on federal Form 1120S
- Employer tips credit reduction from Taxes and Licenses on federal Form 1120S
- Employment credit wages from Salaries and Wages on federal Form 1120S
- Energy efficient home credit from Other Deductions on federal Form 1120
- Federal research credit from Other Deductions on federal Form 1120S
- Income from Alcohol Fuel Credit from Other Income on federal Form 1120S
- Income from Biodiesel and Renewable Diesel Fuels Credit from Other Income on federal Form 1120S
- Low sulfur diesel fuel production credit from Other Deductions on federal Form 1120S
- Orphan drug credit from Other Deductions on federal Form 1120S
- Small employer health insurance premiums credit reduction from Employee Benefit Programs on federal Form 1120S
- Accelerated reporting of cancellation of debt income deferred under Section 108(i)(5)(D)
- OID deferred deduction under Section 108(i)
- Credit to Holders of Tax Credit Bonds from Other Income on federal Form 1120S
- Section 179 recapture from Other Income on federal Form 1120S
- Section 280F recapture from Other Income on federal Form 1120S
- Section 108(i) Deferred Expense
Amounts in this statement are included in a supporting statement for the Other deductions line on Side 2 of the return. To exclude an item from the state return, delete the amount or the entire line item from the statement. The application displays the modified column in black and will not overwrite this new data with subsequent federal-to-state data transfers. For more information, (including details on setting a user preference to mark fields for which you overruled the transferred amount), see the Statements overview.
note
If electronic filing, you must delete the entire line rather than deleting only the amount.
Also included in the printed supporting statement are calculated amounts as follows; use the CAStmtS screen if necessary to adjust these amounts.
- Other losses entered from a K-1 pass-through activity
- Adjustments for passive activity losses and at-risk amounts
- California casualty or theft losses from income-producing property
- Farm rental losses
- Interest on government obligations if an income tax filer
- Investment interest expense
- Pass Through Adjustment
- Pass Through Other Deductions
- Pass Through Other Income
- Pass Through Other Rents
- Pass Through Rents
- Pass Through Royalty Income
- Portfolio Deductions
- Rental losses
- Royalty losses
- California losses from Schedule D-1
- Section 59(e)(2) Expenditures
- California Section 179 deduction
note
For S Corporations, these adjustments are only for the corporate income on Sides 1 and 2. Enter adjustments for Schedule K in the CAK screen in the Shr Allocation folder.
State tax refunds
The application transfers amounts from the
State tax refunds
statement in the federal Inc and H screens and assumes these amounts are deductible in California. Enter adjustments to state tax refunds in the State Amount
column of the statement. Data entered here is included in Other Deductions.Earthquake loss mitigation
Enter amounts excluded from gross income received as a loan forgiveness, grant, credit, rebate, voucher, or other financial incentive issued by the California Residential Mitigation Program or the California Earthquake Authority to assist with expenses paid, or obligations incurred, for earthquake loss mitigation. Data entered here is included in Other Deductions.
Qualified health care service plan income excluded from gross income (C Corp)
Enter amounts excluded from gross income received as qualified health care service plan income. Data entered here is included in Other Deductions.
Schedule F - Computation of Net Income
Suppress calculation of Schedule F
Enter
X
to suppress the calculation of Schedule F. Otherwise, the application calculates Schedule F automatically.note
- For the key corporation or parent client, Schedule F cannot be suppressed.
- New clients and converted clients may benefit from California’s new client options. Select Setup, 1120 Corporation, the California tab, then select New Client Options and mark theSuppress calculation of Schedule Fcheckbox. An entry in this field transfers to the state input screen for newly created and converted clients. This field may be changed if necessary, and will not be overwritten by the choice made in New Client Options dialog.
Schedule V - Cost of Goods Sold
Method of inventory valuation, if different from federal
Use this field to force the method of inventory valuation on Schedule V. If you leave this field blank, the application uses the first line of the corresponding federal statement.
Schedule H - Dividend Income Deduction
The application uses information in this section to prepare Schedule H, classify multiple-state clients’ dividend income for Schedule R, and create the deductible dividends adjustment for Schedule M-1.
Dividend income deduction
Enter dividend income detail in the statement attached to the
Dividend income deduction
field to determine the allowable Schedule H deductions for intercompany dividends and for dividends paid by an insurance company. Also, for S Corporations enter dividends paid to a member of a water’s-edge combined report.The fields in the statement appear in the following order.
- I/O:The application uses the location codes (in state, out of state) to complete Schedule R for multiple-state clients. Enter location codes to designate dividends that are or are not attributable to California. The location codes are in the dropdown and in the following table:
note
If your client doesn't file Schedule R, leave
I/O
blank. Location Code | Description | Destination |
|---|---|---|
I | In state (default) | Schedule R, lines 2 and 19a, Nonbusiness dividends |
O | Out of state | Schedule R, line 2, Nonbusiness dividends |
- Bus / Non:Use the code to identify business and nonbusiness dividends. The application needs this information to determine whether the income transfers to Schedules R and R-5. The codes are in the dropdown and in the following table:
If your client does not complete Schedule R, leave
Bus / Non
blank.Code | Description | Destination |
|---|---|---|
B | Business income (default) | Schedule R-5, Computation of Interest Offset |
N | Nonbusiness income | Schedule R, lines 2 and 19a, Nonbusiness dividends |
- Type:Use the type code to identify the type of dividends the company has received. The type codes are in the dropdown and in the following table:
Type Code | Description | Dest Sch H (100) | Dest Sch H (100S) | Dest Sch H (100W) |
|---|---|---|---|---|
C | Insurance company dividends | Part II, col (d) | Part III, col (d) | Part III, col (d) |
I | Intercompany dividends | Part I, col (c) | Part I, col (c) | Part I, col (c) |
Q | Intercompany dividends qualifying for Water’s-Edge 75% deduction | N/A | Part I, col (c) and Part II, col (d) | Part I, col (c) and Part II, col (d) |
W | Water’s-Edge dividends qualifying for 75% deduction | N/A | Part II, col (d) | Part II, col (d) |
D | Water’s-Edge dividends qualifying for 100% deduction | N/A | Part II, col (d) | Part II, col (d) |
- Payer:Enter the name of the payer.
- Payee:Enter the dividend payee’s name.
- Div Rec’d:Enter the total amount of dividends received. See table above for destinations in Schedule H.
- Elimination Amt Type I/Q only:Enter the amount of dividends received that qualifies for the 100 percent deduction. The application transfers this amount to Column D of Schedule H, Part I.
- Div Pd CY EP:Enter the portion of elimination amount that was paid out of current-year earnings and profits. The application transfers this amount to Column E of Schedule H, Part I.
- Div Pd PY EP:Enter the portion of elimination amount that was paid out of prior-year earnings and profits. The application transfers this amount to Column F of Schedule H, Part I.
- % Ownshp Payer:Enter the percentage of ownership of the dividend payer. For example, enter 75 to represent 75 percent. This field is only applicable to dividends of types Q or W. the application transfers the percentage to Column C of Schedule H, Part II for C Corporations and Column D of Schedule H, Part II and Column C of Schedule H, Part III for S Corporations.
- Qualified Pct:Enter the insurer’s qualified dividend percentage. For example, enter50to represent 50 percent. This field is only applicable to dividends of type C. the application transfers the percentage to Column E of Schedule H, Part II for C Corporations and Part III for S Corporations.
note
For Water’s-Edge filers, amounts from Part I, column g carry over to Part II, column d.
To exclude an item from the state return, delete the amount or the entire line item from the statement. the application displays the modified column in black and will not overwrite this new data with subsequent federal-to-state data transfers. For more information, (including details on setting a user preference to mark fields for which you overruled the transferred amount), see the Statements overview.
note
If electronic filing, you must delete the entire line rather than deleting only the amount.
Insurance company qualified dividend percentage: Preceding Year: [[ut_5py_yyyy]] / … / 2022
Enter qualified dividend percentage detail in the statement attached to the
Preceding Year
fields. This detail is required by California in order to claim a deduction for dividends paid by an insurance company.