Question

The Tax Cuts and Jobs Act repeals the overall limitation on itemized deductions including investment expenses. Therefore, for tax year 2019, California S Corporation shareholders include investment expenses reported to him or her on which of the following Californian income tax schedules?

a. Schedule CA
b. Schedule K-1
c. Schedule S
d. None of the above

Answer 1

a. Schedule CA

Step-by-step explanation:

A California resident taxpayer should use Schedule CA (540) to make adjustments to their federal adjusted gross income and to their federal itemized deductions using California law, only if there are differences in the federal income and deductions and California's income and deductions. This implies that this schedule can only be used by California taxpayers if there are differences between the federal-determined adjusted gross income (AGI) and the California-determined adjusted gross income.