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California Free Printable FTB Publication 1001 Supplemental Guidelines to California Adjustments for 2024 California Supplemental Guidelines to California Adjustments

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Supplemental Guidelines to California Adjustments
FTB Publication 1001 Supplemental Guidelines to California Adjustments

FTB Publication 1001 2023 Supplemental Guidelines to California Adjustments Table of Contents What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Franchise Tax Board Privacy Notice on Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 5 5 Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Total Amount from Federal Form(s) W-2, Box 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Medicaid Waiver Payments Not Reported on Federal Form(s) W-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Other Earned Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Nontaxable Combat Pay Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Taxable Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Dividend Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 IRA Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Pensions and Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Health Savings Account (HSA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Social Security Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Capital Gains or Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Additional Income Taxable Refunds, Credits, or Offsets of State and Local Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Alimony Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Business Income or (Loss) – Depreciation, Amortization, and Property Expensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Business Income or (Loss) – Adjustments to Basis or Business Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Other Gains or Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Rental Real Estate, Royalties, Partnerships, S Corporations, Trusts, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Unemployment Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Other Income/Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Adjustments to Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Itemized Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 ONLINE SERVICES Go to ftb.ca.gov for: • MyFTB – view payments, balance due, and withholding information. • Web Pay – pay income taxes. Choose your payment date up to one year in advance. • CalFile – e-file your personal income tax return. Page 2  FTB Pub. 1001  2023 • R  efund Status – find out when we authorized your refund. • Installment Agreement – request to make monthly payments. • Subscription Services – sign up to receive emails on a variety of tax topics. • T  ax forms and publications. • FTB legal notices, rulings, and regulations. • FTB’s analysis of pending legislation. • Internal procedure manuals to learn how we administer law. State of California — Franchise Tax Board FTB Pub.1001 Supplemental Guidelines to California Adjustments What’s New Federal Veterans Auto and Education Improvement Act (VAEIA) of 2022 – The VAEIA was enacted on January 5, 2023, and made amendments to the federal Servicemembers Civil Relief Act (SCRA). California conforms to the following VAEIA provisions: • A spouse of a servicemember shall neither lose nor acquire a residence or domicile for purposes of taxation with respect to the person, personal property, or income of the spouse by reason of being absent or present in any tax jurisdiction of the United States solely to be with the servicemember in compliance with the servicemember’s military orders. • For any taxable year of the marriage, a servicemember and the spouse of such servicemember may elect to use for purposes of taxation, regardless of the date on which the marriage of the servicemember and the spouse occurred, any of the following: ○ The residence or domicile of the servicemember. ○ The residence or domicile of the spouse. ○ The permanent duty station of the servicemember. For more information, get FTB Pub. 1032, Tax Information for Military Personnel. Federal Consolidated Appropriations Act (CAA), 2023 – The CAA, 2023, was enacted on December 29, 2022, and it includes the federal Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act of 2022. In general, California Revenue and Taxation Code (R&TC) conforms to the changes to the retirement provisions under the SECURE 2.0 Act. California law does not conform to the federal changes that disallow a deduction for charitable conservation easement contributions when the amount of the contribution exceeds 2.5 times the sum of each partner’s relevant basis in the partnership. For more information on the allowance of the deduction for charitable conservation easement contributions for California income tax purposes, get FTB Notice 2023-02. For more general information, refer to the federal act and the California R&TC. Also, see instructions in this publication and get Schedule CA (540), California Adjustments – Residents, or Schedule CA (540NR), California Adjustments – Nonresidents or Part-Year Residents. California Microbusiness COVID-19 Relief Grant – The gross income exclusion for the California Microbusiness COVID-19 Relief Grant is extended until taxable years beginning before January 1, 2025. For more information, see General Information and instructions in this publication, get Schedule CA (540) or Schedule CA (540NR), and see R&TC Sections 17158.1 and 24311. California Hope, Opportunity, Perseverance, and Empowerment (HOPE) for Children Trust Account Program – The California HOPE for Children Trust Account Act created the California HOPE for Children Trust Account Program for the purpose of providing an eligible child with a HOPE trust account. For taxable years beginning on or after January 1, 2023, California law allows an exclusion from gross income for any funds deposited, any investment returns accrued, and any accrued interest in a HOPE trust account and for any funds from a HOPE trust account that is withdrawn or transferred by an eligible youth. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Section 17141.5. Interagency Council on Homelessness Payment Exclusion – For taxable years beginning on or after January 1, 2023, California law allows an exclusion from gross income for payments received pursuant to the California Welfare and Institutions Code Section 8257 by members of the Interagency Council on Homelessness, its advisory committee, or its working groups who are or have been homeless. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Section 17131.13. Kincade Wildfire Exclusion – For taxable years beginning on or after January 1, 2020, and before January 1, 2028, California law allows a qualified taxpayer an exclusion from gross income for any qualified amount received in a settlement from Pacific Gas and Electric (PG&E) Company or its subsidiary relating to the 2019 Kincade Fire. If any qualified amount received from a settlement was included as income for federal purposes, exclude that amount for California purposes. If a qualified taxpayer included income for a qualified amount received from this settlement in a prior taxable year, the taxpayer can file an amended tax return for that year within the normal statute of limitations. For more information, see instructions in this publication, get Schedule CA (540) or Schedule CA (540NR), and see R&TC Sections 17139.2 and 24309.6. Zogg Wildfire Exclusion – For taxable years beginning on or after January 1, 2020, and before January 1, 2028, California law allows a qualified taxpayer an exclusion from gross income for any qualified amount received in a settlement from PG&E Company or its subsidiary relating to the 2020 Zogg Fire. If any qualified amount received from a settlement was included as income for federal purposes, exclude that amount for California purposes. If a qualified taxpayer included income for a qualified amount received from this settlement in a prior taxable year, the taxpayer can file an amended tax return for that year within the normal statute of limitations. For more information, see instructions in this publication, get Schedule CA (540) or Schedule CA (540NR), and see R&TC Sections 17139.3 and 24309.7. Discharge of Student Fees – For taxable years beginning on or after January 1, 2022, and before January 1, 2027, California law allows an exclusion from gross income for any amount of unpaid fees due or owed by a student to a community college that was discharged pursuant to California Education Code Section 32527. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Section 17131.21. Guaranteed Income Pilot Program Payment Exclusion – Beginning on June 30, 2022, and before July 1, 2026, California law allows an exclusion from gross income for any payments received by an individual from a guaranteed income pilot program or project that receives a grant pursuant to California Welfare and Institution Code Section 18997. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Section 17131.12. General Information In general, for taxable years beginning on or after January 1, 2015, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2015. However, there are continuing differences between California and federal law. When California conforms to federal tax law changes, we do not always adopt all of the changes made at the federal level. For more information, go to ftb.ca.gov and search for conformity. Additional information can be found in the instructions for California Schedule CA (540) or Schedule CA (540NR), and the Business Entity tax booklets. The instructions provided with California tax forms are a summary of California tax law and are only intended to aid taxpayers in preparing their state income tax returns. We include information that is most useful to the greatest number of taxpayers in the limited space available. It is not possible to include all requirements of the R&TC in the instructions. Taxpayers should not consider the instructions as authoritative law. Conformity For updates regarding federal acts, go to ftb.ca.gov and search for conformity. Federal Acts – In general, the R&TC does not conform to the changes under the following federal acts. California taxpayers continue to follow the IRC as of the specified date of January 1, 2015, with modifications. For specific adjustments due to the following acts, see Schedule CA (540) or Schedule CA (540NR) specific line instructions: • American Rescue Plan Act (ARPA) of 2021 (enacted on March 11, 2021) • Consolidated Appropriations Act (CAA), 2021 (enacted on December 27, 2020) FTB Pub. 1001  2023  Page 3 • Setting Every Community Up for Retirement Enhancement (SECURE) Act (enacted on December 20, 2019) • Tax Cuts and Jobs Act (TCJA) (enacted on December 22, 2017) Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant – For taxable years beginning on or after January 1, 2021, and before January 1, 2030, California law allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the California Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program that is established by Section 12100.975 of the Government Code. If any amount was included as income for federal purposes, exclude that amount for California purposes. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Sections 17158 and 24312. Turf Replacement Water Conservation Program – For taxable years beginning on or after January 1, 2022, and before January 1, 2027, California law allows an exclusion from gross income for any amount received as a rebate, voucher, or other financial incentive issued by a public water system, as defined, local government, or state agency for participation in a turf replacement water conservation program. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Sections 17138.2 and 24308.9. Fire Victims Trust Exclusion – For taxable years beginning before January 1, 2028, California law allows a qualified taxpayer an exclusion from gross income for any amount received from the Fire Victims Trust, established pursuant to the order of the United States Bankruptcy Court for the Northern District of California dated June 20, 2020, case number 19-30088, docket number 8053. If any amount was included as income for federal purposes, exclude that amount for California purposes. If a qualified taxpayer included income for an amount received from the Fire Victims Trust in a prior taxable year, the taxpayer can file an amended tax return for that year. If the normal statute of limitations has expired, the taxpayer must have filed a claim by September 29, 2023. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Sections 17138.5 and 24309.3. Thomas and Woolsey Wildfires Exclusion – For taxable years beginning before January 1, 2027, California law allows a qualified taxpayer an exclusion from gross income for any amount received in a settlement from Southern California Edison for claims relating to the 2017 Thomas Fire or the 2018 Woolsey Fire. If any amount was included as income for federal purposes, exclude that amount for California purposes. If a qualified taxpayer included income for an amount received from these settlements in a prior taxable year, the taxpayer can file an amended tax return for that year. If the normal statute of limitations has expired, the taxpayer must Page 4  FTB Pub. 1001  2023 have filed a claim by September 29, 2023. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Sections 17138.6 and 24309.1. Reporting Requirements –Taxpayers may need to file form FTB 4197, Information on Tax Expenditure Items, with the tax return to report tax expenditure items as part of the Franchise Tax Board’s (FTB) annual reporting requirements under R&TC Section 41. To determine if you have an R&TC Section 41 reporting requirement, see the R&TC Section 41 Reporting Requirements section in 540, Personal Income Tax Booklet, or 540NR, Nonresident or Part-Year Resident Booklet, or get form FTB 4197. Expanded Definition of Qualified Higher Education Expenses – For taxable years beginning on or after January 1, 2021, California law conforms to the expanded definition of qualified higher education expenses associated with participation in a registered apprenticeship program and payment on the principal or interest of a qualified education loan under the federal Further Consolidated Appropriations Act, 2020. Shuttered Venue Operator Grant – For taxable years beginning on or after January 1, 2019, California law allows an exclusion from gross income for amounts awarded as a shuttered venue operator grant under the CAA, 2021. The CAA, 2021, allows deductions for eligible expenses paid for with grant amounts. California law conforms to this federal provision, with modifications. For California purposes, these deductions do not apply to an ineligible entity. “Ineligible entity” means a taxpayer that is either a publiclytraded company or does not meet the 25% reduction from gross receipts requirements under Section 311 of Division N of the CAA, 2021. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR). Moving Expense Deduction – For taxable years beginning on or after January 1, 2021, taxpayers should file California form FTB 3913, Moving Expense Deduction, to claim moving expense deductions. Attach the completed form FTB 3913 to Form 540, California Resident Income Tax Return, or Form 540NR, California Nonresident or Part-Year Resident Income Tax Return. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and form FTB 3913. Paycheck Protection Program (PPP) Loans Forgiveness – For taxable years beginning on or after January 1, 2019, California law allows an exclusion from gross income for covered loan amounts forgiven under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, Paycheck Protection Program and Health Care Enhancement Act, Paycheck Protection Program Flexibility Act of 2020, the CAA, 2021, or the PPP Extension Act of 2021. Also, the ARPA expands PPP eligibility to include “additional covered nonprofit entities” which includes certain Code 501(c) nonprofit organizations and Internet-only news publishers and Internet-only periodical publishers. California law does not conform to this expansion of PPP eligibility. The CAA, 2021, allows deductions for eligible expenses paid for with covered loan amounts. California law conforms to this federal provision, with modifications. For California purposes, these deductions do not apply to an ineligible entity. “Ineligible entity” means a taxpayer that is either a publicly-traded company or does not meet the 25% reduction from gross receipts requirements under Section 311 of Division N of the CAA, 2021. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), or go to ftb.ca.gov and search for AB 80. Small Business COVID-19 Relief Grant Program – For taxable years beginning on or after January 1, 2020, and before January 1, 2030, California law allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the COVID-19 Relief Grant under Executive Order No. E 20/21-182 and the California Small Business COVID-19 Relief Grant Program established by Section 12100.83 of the Government Code. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR). Income Exclusion for Rent Forgiveness – For taxable years beginning on or after January 1, 2020, and before January 1, 2025, gross income shall not include a tenant’s rent liability that is forgiven by a landlord or rent forgiveness provided through funds grantees received as a direct allocation from the Secretary of the Treasury based on the CAA, 2021. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR). Other Loan Forgiveness – For taxable years beginning on or after January 1, 2019, California law allows an exclusion from gross income for borrowers of forgiveness of indebtedness described in Section 1109(d)(2)(D) of the CARES Act as stated by section 278, Division N of the CAA, 2021. The CAA, 2021, allows deductions for eligible expenses paid for with covered loan amounts. California law conforms to this federal provision, with modifications. For California purposes, these deductions generally do not apply to an ineligible entity. “Ineligible entity” means a taxpayer that is either a publicly-traded company or does not meet the 25% reduction from gross receipts requirements under Section 311 of the CAA, 2021. For California purposes, if you are an ineligible entity and deducted eligible expenses for federal purposes, enter the total amount of those expenses deducted on the applicable line(s) on your tax return. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), or go to ftb.ca.gov and search for AB 80. California Microbusiness COVID-19 Relief Grant – For taxable years beginning on or after January 1, 2020, and before January 1, 2025, for personal income tax filers, and beginning on or after September 1, 2020, and before January 1, 2025, for corporate filers, California law allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the California Microbusiness COVID-19 Relief Program that is administered by the Office of Small Business Advocate (CalOSBA). Enter the amount of this type of income on the applicable line(s) on your tax return. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Sections 17158.1 and 24311. California Venues Grant – For taxable years beginning on or after September 1, 2020, and before January 1, 2030, California law allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the California Venues Grant Program that is administered by the CalOSBA. Enter the amount of this type of income on the applicable line(s) on your tax return. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and see R&TC Sections 17158 and 24312. Coronavirus Aid, Relief, and Economic Security Act – The CARES Act was enacted on March 27, 2020. In general, the R&TC does not conform to the changes. California taxpayers continue to follow the IRC as of the specified date of January 1, 2015, with modifications. California law does not conform to the following federal provisions under the CARES Act: • Exclusion for certain employer payment of student loans • Health-savings account changes The above list is not intended to be all-inclusive of the federal and state conformities and differences. For specific adjustments, see instructions in this publication, and get Schedule CA (540) or Schedule CA (540NR), or refer to the R&TC. Worker Status: Employees and Independent Contractors – Some individuals may be classified as independent contractors for federal purposes and employees for California purposes, which may also cause changes in how their income and deductions are classified. Proposition 22 was operative as of December 16, 2020, and may affect a taxpayer’s worker classification. For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR). Rental Real Estate Activities – For taxable years beginning on or after January 1, 2020, the dollar limitation for the offset for rental real estate activities shall not apply to the low ITEM income housing credit program. For more information, see R&TC Section 17561(d)(1), and get form FTB 3801-CR, Passive Activity Credit Limitations. Commercial Cannabis Activity – Beginning in taxable year 2020, California allows individuals and other taxpayers operating under the personal income tax law to claim credits and deductions of business expenses paid or incurred during the taxable year in conducting commercial cannabis activity. Sole proprietors are those that conduct a commercial cannabis activity that is licensed under California Medicinal and Adult-Use Cannabis Regulation and Safety Act (CA MAUCRSA). For more information, see instructions in this publication, get Schedule CA (540) or Schedule CA (540NR) and get form FTB 4197. Excess Business Loss Limitation – The CARES Act made amendments to IRC Section 461(l) by eliminating the excess business loss limitation of noncorporate taxpayers for taxable year 2020 and retroactively removing the limitation for taxable years 2018 and 2019. California law does not conform to those amendments. Also, California law does not conform to the federal changes in the ARPA and the federal Inflation Reduction Act of 2022 that extend the limitation on excess business losses of noncorporate taxpayers for taxable years beginning after December 31, 2020, and ending before January 1, 2029. Complete form FTB 3461, California Limitation on Business Losses, if you are a noncorporate taxpayer and your net losses from all of your trades or businesses are more than $289,000 ($578,000 for married/RDP taxpayers filing a joint return). For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR), and form FTB 3461. Alimony – California law does not conform to changes made by the TCJA to federal law regarding alimony and separate maintenance payments that are not deductible by the payor spouse, and are not includable in the income of the receiving spouse, if made under any divorce or separation agreement executed after December 31, 2018, or executed on or before December 31, 2018, and modified after that date (if the modification expressly provides that the amendments apply). For more information, see instructions in this publication and get Schedule CA (540) or Schedule CA (540NR). DIFFERENCES BETWEEN FEDERAL AND CALIFORNIA LAW Registered Domestic Partners (RDPs) – Under California law, RDPs must file their California income tax returns using either the married/RDP filing jointly or married/RDP filing separately filing status. RDPs have the same legal benefits, protections, and responsibilities as married couples unless otherwise specified. If you entered into in a same sex legal union in another state, other than a marriage, and that union has been determined to be substantially equivalent to a California registered domestic partnership, you are required to file a California income tax return using either the married/RDP filing jointly or married/RDP filing separately filing status. For purposes of California income tax, references to a spouse, husband, or wife also refer to a California RDP, unless otherwise specified. When we use the initials RDP, they refer to both a California registered domestic “partner” and a California registered domestic “partnership,” as applicable. For more information on RDPs, get FTB Pub. 737, Tax Information for Registered Domestic Partners. Purpose Use these guidelines to make adjustments to federal adjusted gross income (AGI) that are necessary because of current year or prior year differences between California and federal law. Generally, you report these adjustments directly on Schedule CA (540 or 540NR). If required to make multiple adjustments for any one line on Schedule CA (540 or 540NR), attach a statement to your return summarizing these adjustments. In some cases, you need to complete other forms or schedules to figure the adjustment to carry to Schedule CA (540 or 540NR). See “Order Forms and Publications” in your tax booklet for information about ordering forms or go to ftb.ca.gov/forms. Franchise Tax Board Privacy Notice on Collection Our privacy notice can be found in annual tax booklets or online. Go to ftb.ca.gov/privacy to learn about our privacy policy statement, or go to ftb.ca.gov/forms and search for 1131 to locate FTB 1131 EN-SP, Franchise Tax Board Privacy Notice on Collection – Aviso de Privacidad del Franchise Tax Board sobre la Recaudación. To request this notice by mail, call 800.338.0505 and enter form code 948 when instructed. WHAT TO DO FOR CALIFORNIA Income • Active duty military pay Special rules apply to active duty military pay and income from services performed by certain spouses of military personnel. Native Americans with military pay, also see “Native American earned income exemption” in this section. Get FTB Pub. 1032, Tax Information for Military Personnel, for more information. • Combat zone foreign earned income exclusion For taxable years beginning on and after January 1, 2018, California does not conform to the federal foreign earned income exclusion for amounts received by certain U.S. citizens or resident aliens with an abode in the U.S., specifically contractors or employees of contractors supporting the U.S. Armed Forces in designated combat zones. Enter the amount excluded from federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section B, line 8d, column C. FTB Pub. 1001  2023  Page 5 ITEM • Native American earned income exemption DIFFERENCES BETWEEN FEDERAL AND CALIFORNIA LAW WHAT TO DO FOR CALIFORNIA Federal law taxes income received by Native Americans from reservation sources. California does not tax federally recognized tribal members living in California Indian country who earn income from any federally recognized California Indian country. Military compensation is considered income from reservation sources. Native Americans who are domiciled on an Indian reservation and receive military compensation must refigure any AGI percentage calculation(s) by first subtracting military compensation from federal AGI. Enrolled members who receive reservation sourced per capita income must reside in their affiliated tribe’s Indian country to qualify for tax exempt status. For more information, get form FTB 3504, Enrolled Tribal Member Certification. Enter earnings on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, applicable line 1a through line 1h, column B. Enter any other income that is included in federal income that is exempt for California on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section B, line 8z, column B. • Income exempted by U.S. tax Income exempted by U.S. tax treaty under federal law may be treaties excluded for California only if the treaty specifically excludes the income for state purposes. If a treaty does not specifically exempt income from state income tax, California requires the reporting of adjusted gross income from all sources. Enter the amount excluded from federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, applicable line 1a through line 1h, column C. • Sick pay received under the Federal Insurance Contributions Act and Railroad Retirement Act Enter qualifying sick pay included in federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1a or line 1h as applicable, column B. California excludes from income the sick pay received under these acts. Total Amount from Federal Form(s) W-2, Box 1 • Employees and independent Some taxpayers may be classified as independent contractors for contractors federal purposes and as employees for California purposes. • Nonresident employee compensation of merchant seamen, rail carriers, motor carriers, and air carriers For California, nonresidents may exclude the following from gross income: compensation for the performance of duties of certain merchant seamen and compensation of an employee of a rail carrier, motor carrier, or air carrier. Medicaid Waiver Payments Not Reported on Federal Form(s) W-2 • Exclusion for In-Home California law allows an exclusion from gross income for IHSS Supportive Services (IHSS) supplementary payments received by IHSS providers. IHSS providers supplementary payments only receive a supplementary payment if they paid a sales tax on the IHSS services they provide. The supplementary payment is equal to the sales tax paid plus any increase in the federal payroll withholding paid due to the supplementary payment. Other Earned Income • Employee income exclusions for ridesharing fringe benefits Page 6  FTB Pub. 1001  2023 Under federal law and the provisions administered by the Employment Development Department, certain qualified transportation benefits are excluded from gross income. Under the R&TC, there are no monthly limits for the exclusion of these benefits and California’s definitions are more expansive. Federal law provides an income exclusion for the value of qualified parking provided to an employee. Federal law also provides an income exclusion for commuter highway transportation and transit passes provided to an employee. California law provides an income exclusion for compensation or the fair market value of other benefits (except for salary or wages) received for participation in a California ridesharing arrangement (subsidized parking, commuting in a third-party vanpool, a private commuter bus, a subscription taxipool, and monthly transit passes provided for employees and their dependents). If the taxpayer is classified as an employee for California purposes, enter the amount reported as gross income of the business from federal Schedule C (Form 1040), Profit or Loss From Business, line 7, as wages on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1a, column C. Enter the amount included in federal income that qualifies for the California exclusion on Schedule CA (540NR), Part II, Section A, line 1a, column B. Get FTB Pub. 1031, Guidelines for Determining Resident Status, for more information. Enter on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1d, column B the IHSS supplementary payments included in federal wages. Enter the amount of ridesharing fringe benefits received and included in federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1h, column B. DIFFERENCES BETWEEN FEDERAL AND CALIFORNIA LAW WHAT TO DO FOR CALIFORNIA • California Qualified Stock Options (CQSOs) California law provides an income exclusion for California qualified stock options (issued on or after January 1, 1997, and before January 1, 2002), that are exercised by an individual who has earned income for the taxable year from the corporation granting the CQSO of $40,000 or less, and has exercised options for no more than 1,000 shares with a combined fair market value of less than $100,000 (determined at the time the options are granted). Get FTB Pub. 1004, Equity-Based Compensation Guidelines, for more information. Enter on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1h, column B the amount included in federal income that qualifies for the California exclusion. • Clergy housing exclusion Both California and federal law allow members of the clergy an exclusion from income for either the rental value of a home furnished as part of their compensation or for a rental allowance paid as part of their compensation to the extent it is used to provide a home. Effective January 1, 2002, under federal law, the exclusion for the rental allowance is limited to the fair rental value of the home (including furnishings and a garage) and the cost of utilities. California does not limit the exclusion for the rental allowance to the fair rental value of the home. Enter on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1h, column B the excess housing allowance exclusion allowed for California over the federal exclusion. • Housing exclusion for stateemployed clergy Effective January 1, 2003, for clergy members employed by the State of California, up to 50% of gross salary may be allocated for either the rental value of a home furnished or the rental allowance paid to them to rent or provide a home. If the amount of your federal exclusion is less than your California exclusion, enter the adjustment on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1h, column B. If the amount of your federal exclusion is greater than your California exclusion, enter the adjustment on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1h, column C. The TCJA extended combat zone tax benefits to the Sinai Peninsula of Egypt. California does not conform. Enter the amount of combat pay excluded from federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1i, column C. Get FTB Pub. 1032 for more information. ITEM Nontaxable Combat Pay Election • Combat zone extended to Egypt’s Sinai Peninsula Taxable Interest Income • Non-California bonds: 1) United States Federal law requires the interest earned on federal bonds (U.S. obligations) to be included in gross income. California does not tax this interest income. The following are not considered U.S. obligations for California purposes: Federal National Mortgage Association (Fannie Mae); Government National Mortgage Association (Ginnie Mae); or Federal Home Loan Mortgage Corporation (Freddie Mac). Enter the amount of federal bond interest included in federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 2, column B. 2) Other states Federal law does not tax interest from state or local bonds. California taxes the interest from non-California state and local bonds. Enter the interest from non-California state or local bonds on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 2, column C. California law excludes from gross income, interest income received from settlement payments by individuals persecuted by the regime that was in control of the Ottoman Turkish Empire from 1915 until 1923, or the individual’s heirs or estate. Enter the interest on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 2, column B. • Interest income received from settlement payments from individuals persecuted during the Ottoman Turkish Empire from 1915-1923 FTB Pub. 1001  2023  Page 7 DIFFERENCES BETWEEN FEDERAL AND CALIFORNIA LAW WHAT TO DO FOR CALIFORNIA California does not tax dividends paid by a fund attributable to interest received from U.S. obligations or California state or municipal obligations if at least 50% of the fund’s assets would be exempt from California tax when held by an individual. California taxes dividends derived from mutual funds that are paid from interest received from obligations (bonds) issued by non-California states or municipalities in other states. The fund will provide a statement regarding the dividends it pays. If the value of U.S. and California state or municipal obligations is at least 50% of the fund’s total assets, enter the amount of exempt interest dividends that are attributed to U.S. obligations included in federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 2, column B. If the taxpayer received any dividends from the fund attributable to obligations issued by non-California states or municipalities within other states that were excluded from the taxpayer’s federal income, enter that excluded amount on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 2, column C. • Noncash patronage dividend from farmers’ cooperatives or mutual associations Federal law taxes the dividend in the year of receipt. California permits an election to include the dividend in gross income either when received or when redeemed. Once an election is made, this method must be followed unless a change in the method of reporting is approved by the FTB. If you elect or elected to include the dividend in the year redeemed, enter the amount received on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 3, column B. Enter the amount redeemed on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 3, column C. • Controlled Foreign Corporation (CFC) California taxes CFC dividends in the year distributed rather than in the year earned. If CFC dividends are earned in one year and distributed in a later year, enter the dividends included in federal income for the year earned on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 3, column B and enter the dividends for the year distributed on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 3, column C. ITEM • Exempt interest dividends (mutual funds) Dividend Income • Distributions of pre-1987 Prior to 1987, California treated all federal S corporations as earnings from S corporations C corporations. So when a federal S corporation first becomes a California S corporation, its initial accumulated adjustments account (AAA) has a zero balance regardless of the federal AAA balance. If distributions from the S corporation exceed the California balance in the AAA, you have a distribution from pre‑1987 earnings. Enter distributions from pre-1987 earnings (or earnings in any later year that the corporation was a federal S corporation and a California C corporation) on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 3, column C. • Regulated Investment Company (RIC) California taxes the undistributed capital gain from a RIC in the year distributed rather than in the year earned. If capital gain from a RIC is earned in one year and distributed in a later year, enter the capital gain included in federal income for the year earned on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 3, column B and enter the capital gain for the year distributed on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 3, column C. • IRA basis adjustments There may be differences in the taxable amount of the distribution depending on when the contributions were made, if you changed residency status after you first began making contributions to your IRA, or made different deductions for California because of differences between your California and federal self-employment income. You will need to calculate your IRA basis as if you were a California resident for all prior years. Get FTB Pub. 1005, Pension and Annuity Guidelines, for more information. • Roth IRAs Federal law and California law are the same regarding contributions, conversions, and distributions. However, the taxable amount of a distribution may not be the same because of basis differences. Get FTB Pub. 1005 for more information. California does not tax railroad retirement benefits reported on federal Form RRB-1099-R, Annuities or Pensions by the Railroad Retirement Board, or RRB-1099, Payments by the Railroad Retirement Board. Enter on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 5b, column B, the amount of Tier 1 (non-Social Security equivalent) or Tier 2 railroad retirement benefits included in adjusted gross income on your federal return. Get FTB Pub. 1005 for more information. IRA Distribution Pensions and Annuities • Railroad retirement benefits Page 8  FTB Pub. 1001  2023 DIFFERENCES BETWEEN FEDERAL AND CALIFORNIA LAW WHAT TO DO FOR CALIFORNIA • Pension plan – small business tax credit for new retirement plan expenses Federal law allows an income tax credit for 50% of the first $1,000 in administrative and retirement-education expenses for any small business that adopts a new qualified defined benefit or defined contribution plan. The federal deduction is reduced by the amount of the credit. California has no similar credit. Enter the amount of the income tax credit on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section B, line 3, line 5, or line 6, column B. • Employer-sponsored pensions and annuities (for annuity starting dates after July 1, 1986, and before January 1, 1987) if you elected to use the “three-year rule” for California Under federal law, no “three-year rule” is allowed for any individual whose annuity starting date is after July 1, 1986. Under California law, an individual whose annuity starting date was after July 1, 1986, and before January 1, 1987, could elect to use the “three-year rule” if: 1) the employer paid part of the cost and 2) during the three years from the date of the first annuity payment, the total amount receivable will equal or exceed the cost (investment) in the contract. If your annuity starting date was after July 1, 1986, and before January 1, 1987, and you elected to use the three-year recovery rule for California, an adjustment is required. Enter the difference on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 5b, column C. Get FTB Pub. 1005 for more information. • Canadian Registered Retirement Savings Plans (RRSP) Under both federal and California law, the RRSP does not qualify as an Individual Retirement Account (IRA) and does not receive IRA treatment. The federal treaty that allows taxpayers to elect to defer taxation on their RRSP earnings until the time of distribution does not apply for California income tax purposes. California residents must include their RRSP earnings in their taxable income in the year earned. Enter on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 2, line 3, or line 7, column C, the earnings from the RRSP. • Interest/dividend income Federal law allows taxpayers to exclude from gross income the interest and dividends earned on HSAs. California does not conform. Therefore, all interest earned and any taxable dividends earned on HSAs are taxable in the year earned. As a result of this tax treatment, the taxpayer has a California basis in the HSA account. Enter the current year interest earned as an adjustment on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 2, column C. Enter the current year taxable dividends as an adjustment on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 3, column C. • Contributions Federal law allows taxpayers a deduction for contributions to an HSA account. Contributions made on behalf of an eligible individual by an employer are excluded from federal Form W-2, Wage and Tax Statement, wages. California does not conform to this provision. ITEM Health Savings Account (HSA) • Distributions • Rollover from an Archer Medical Savings Account (Archer MSA) to an HSA Enter the amount from Schedule CA (540), Part I or Schedule CA (540NR), Part II, line 13, column A, on line 13, column B. Enter the amount of any employer contribution from federal Form W-2, box 12, code W on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 1h, column C. Distributions that are not used for qualified medical expenses Enter the required adjustment from are includible in federal gross income. The amount taxable under Schedule CA (540), Part I or Schedule CA (540NR), federal law, less interest and dividend income previously taxed by Part II, line 8f, column A, on line 8f, column B. California, is not taxable by California. Generally, federal law and California law are the same. However, since California does not recognize Health Savings Accounts (HSAs), a rollover from an Archer MSA to an HSA is treated as distribution not used for qualified medical expenses. For California, the distribution is included in California taxable income and the additional 12.5% tax applies (R&TC Section 17215). Enter the amount rolled over from an Archer MSA to an HSA, less interest or dividend earnings previously taxed by California, on Schedule CA (540), Part I or Schedule CA (540NR), Part II, line 8e, column C. California does not tax social security benefits and equivalent Tier 1 railroad retirement benefits. Enter on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 6, column B, the amount of social security benefits and equivalent Tier 1 railroad retirement benefits you included in adjusted gross income on your federal return. The TCJA amended IRC Section 1221 excluding a patent, invention, model or design (whether or not patented), and a secret formula or process held by the taxpayer who created the property (and certain other taxpayers) from the definition of a capital asset. California does not conform. Report your capital assets on Schedule D (540 or 540NR), California Capital Gain or Loss Adjustment, and to figure the adjustment to make on Schedule CA (540 or 540NR). Social Security Benefits • Social security benefits and equivalent Tier 1 railroad retirement benefits Capital Gains or Losses • Capital assets FTB Pub. 1001  2023  Page 9 DIFFERENCES BETWEEN FEDERAL AND CALIFORNIA LAW WHAT TO DO FOR CALIFORNIA The TCJA established opportunity zones. IRC Sections 1400Z-1 and 1400Z-2 provide a deferral of inclusion of gross income for capital gains reinvested or invested in a qualified opportunity zone fund, and exclude capital gains from the sale or exchange of an investment of such funds. California does not conform. Use California Schedule D (540 or 540NR) if you claim the federal IRC Sections 1400Z-1 and 1400Z-2 on your federal return. Enter the entire gain realized on Schedule D (540 or 540NR), line 1, column (e). For federal purposes, the capital gains deferred as a result of reinvesting or investing are included in gross income in the year of sale or disposition of the investment. California does not conform. If, for California purposes, gains from investment in qualified opportunity zone property had been included in income during previous taxable years, do not include the gain in the current year income. • Gain on sale or disposition of a qualified assisted housing development to low-income residents or to specified entities who maintain housing for low-income residents Federal law does not allow special treatment on gains related to the sale of certain assisted housing. California law permits the deferral of such gain, under certain conditions, if the proceeds are reinvested in residential real property (other than a personal residence) within two years of the sale. Enter the transaction on California Schedule D (540 or 540NR), line 1. In column (e) enter “-0- R&TC Section 18041.5.” Reduce the basis of replacement property by the gain deferred. Attach a schedule to your return reflecting computation of basis in the replacement property, or a statement of intent to replace within the replacement period. • Gain on sale of personal residence For sale or exchanges after May 6, 1997, federal law allows an exclusion of gain on the sale of a personal residence in the amount of $250,000 ($500,000 if married filing jointly). The taxpayer must have owned and occupied the residence as a principal residence for at least 2 of the 5 years before the sale. California conforms to this provision. However, California taxpayers who served in the Peace Corps during the 5 year period ending on the date of the sale may reduce the 2 year period by the period of service, not to exceed 18 months. If there is a difference between the amounts excluded (or depreciated, if recapture applies) for federal and California, complete California Schedule D (540 or 540NR). Transfer the amount from California Schedule D (540 or 540NR), line 12a, to Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 7, column B (if gain is less than federal). Transfer the amount from California Schedule D (540 or 540NR), line 12b, to Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section A, line 7, column C (if gain is more than federal). • Undistributed capital gains for regulated investment company (RIC) shareholders Federal law requires certain undistributed capital gains reported Do not enter the amount of undistributed capital on federal Form 2439, Notice to Shareholder of Undistributed gains on California Schedule D (540 or 540NR). Long-Term Capital Gains, to be included in the gross income of the mutual fund shareholder and allows a tax credit for the capital gains tax paid by the RIC. California has no similar provision. • Gain or loss on sale of property inherited before January 1, 1987 Federal gain or loss may differ from the California gain or loss due to differences in the basis of property. For property inherited on or after January 1, 1987, the California basis and the federal basis are the same. Report the amount of California capital gains and losses on California Schedule D (540 or 540NR). • Capital loss carrybacks Federal law allows a deduction for carrybacks of certain capital losses. California has no similar provision. Report the amount of California capital gains and losses on California Schedule D (540 or 540NR). • Exclusion of deferral and gain on the sale of qualified small business stock Federal law allows deferral and exclusion under IRC Sections 1045 and 1202 of the gain on sale of qualifying small business stock that was held for more than five years. California does not conform. Use California Schedule D (540 or 540NR) if you claim IRC Section 1045 deferral or IRC Section 1202 exclusion on your federal return. Enter the entire gain realized on Schedule D (540 or 540NR), line 1, column (e). ITEM • Deferral and exclusion of capital gains in qualified opportunity zone funds Additional Income Taxable Refunds, Credits, or Offsets of State and Local Income Taxes • State income tax refund Federal law includes the state income tax refund in income. California excludes the state income tax refund from income. Enter the amount of state income tax refund included in federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section B, line 1, column B. • Alimony and separate maintenance payments received Under federal law, the TCJA, alimony and separate maintenance payments are not includable in the income of the receiving spouse, if made under any divorce or separation agreement executed after December 31, 2018, or executed on or before December 31, 2018, and modified after that date (if the modification expressly provides that the amendments apply). California does not conform. Enter the alimony and separate maintenance payment received not included in federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section B, line 2a, column C. • Alimony received by a nonresident alien For a nonresident alien, alimony received which was not included on the federal return must be included on the California return. Enter the amount not included in federal income on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section B, line 2a, column C. Alimony Received Page 10  FTB Pub. 1001  2023 ITEM DIFFERENCES BETWEEN FEDERAL AND CALIFORNIA LAW WHAT TO DO FOR CALIFORNIA Business Income or (Loss) — Depreciation, Amortization, and Property Expensing • Income from a business, trade, or profession conducted partially in California If a nonresident owns a business, trade, or profession carried on within California that is an integral part of a unitary business carried on both within and outside California, the amount of such income having its source in California is determined in accordance with the provisions of R&TC Sections 25120 through 25141. Gross income from the entire business, trade, or profession is included in the nonresident’s adjusted gross income from all sources. The nonresident’s California source business income is generally determined by an apportionment formula. Refer to Cal. Code Regs., tit. 18, Section 17951. • Research and experimental expenditures For federal purposes, costs paid or incurred on or after January 1, 2022, for specified research and experimental expenditures must be capitalized and amortized ratably over a five-year period. California does not conform. Use form FTB 3885A, Depreciation and Amortization Adjustments, to figure the adjustment to make on Schedule CA (540 or 540NR). • Asset expense election (IRC Section 179) Federal limitation amounts are different than California limitation amounts. California allows an expense election up to $25,000 and California phaseout starts at $200,000. For qualified IRC Section 179 Gulf Opportunity Zone property, the maximum deduction is higher than the deduction for most IRC Section 179 property. Federal law allows an IRC Section 179 expense election for off-the-shelf software and certain qualified real property. California does not conform. Use form FTB 3885A to figure the adjustment to make on Schedule CA (540 or 540NR). • MACRS recovery period for nonresidential real property For federal purposes, the recovery period for nonresidential real property is 39 years. California conformed to this provision on January 1, 1997. The California recovery period of 31.5 years should be used for property placed in service on or after May 13, 1993, and before January 1, 1997. Use form FTB 3885A to figure the adjustment to make on Schedule CA (540 or 540NR). • Alternative Depreciation System (ADS) recovery period for certain residential rental property For federal purposes, the recovery period for taxable years Use form FTB 3885A to figure the adjustment to beginning after December 31, 2017, is 30 years for residential make on Schedule CA (540 or 540NR). rental property held by an electing real property trade or business that was placed in service prior to January 1, 2018, but that was not subject to ADS prior to that date. California does not conform to the federal change in the recovery period. • Depreciation of assets acquired prior to January 1, 1987 Federal law allowed the rapid write-off of tangible personal property and buildings over recovery periods which were shorter than economic useful lives under the Accelerated Cost Recovery System (ACRS). California law in general did not conform to federal law but did allow ACRS for certain residential rental property constructed in California on or after July 1, 1985, and before January 1, 1987. • Additional depreciation (IRC Section 168(k)) Federal law allows an additional 30% first-year depreciation deduction Use form FTB 3885A to figure the adjustment to and AMT depreciation adjustment for property placed in service make on Schedule CA (540 or 540NR). after September 10, 2001. The first-year depreciation deduction is increased to 50% for property placed in service after May 5, 2003. For assets placed in service on or after September 11, 2001, and before January 1, 2005, California did not conform to these provisions. Federal law allows an additional 50% first-year special depreciation for certain qualified property acquired before September 28, 2017, and placed in service after September 27, 2017. The percentage is phased down from 50% by 10% per calendar year beginning in 2018. California did not conform to this provision. The TCJA increased the amount of the additional first-year depreciation allowance from 50% to 100% for certain qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. The 100% allowance is phased down by 20% per calendar year for property placed in service in taxable years beginning after 2022. The additional first-year depreciation deduction is allowed for new and used property. California does not conform to this provision. • Amortization of goodwill and certain other intangibles Property classified as IRC Section 197 property under federal Use form FTB 3885A to figure the adjustment to law is also IRC Section 197 property for California purposes. make on Schedule CA (540 or 540NR). However, for IRC Section 197 property acquired before January 1, 1994, the California basis as of January 1, 1994, must be amortized over the remaining federal amortization period. Use form FTB 3885A to figure the adjustment to make on Schedule CA (540 or 540NR). FTB Pub. 1001  2023  Page 11 DIFFERENCES BETWEEN FEDERAL AND CALIFORNIA LAW ITEM WHAT TO DO FOR CALIFORNIA • Business property moves into California Depreciation methods and useful lives of trade or business property must be acceptable to California. If an unacceptable method was used before the move into California, use the straight-line method to compute the basis in the property. • Accelerated depreciation for business property on Indian reservations Under federal law, qualified Indian reservation property placed in service after January 1, 1994, and before January 1, 2022, will be subject to special MACRS recovery periods. California did not conform to this provision. Use form FTB 3885A to figure the adjustment to make on Schedule CA (540 or 540NR). • Classification of certain race horses as three-year property. Under federal law, race horses that are two years old or younger and are placed in service after December 31, 2020, and before January 1, 2022, are subject to a special recovery period of three years. California law does not conform to this provision. Use form FTB 3885A to figure the adjustment to make on Schedule CA (540 or 540NR). • Recovery period for a motorsports entertainment complex. Under federal law, motorsports entertainment complexes placed in service after December 31, 2020, and before January 1, 2026, are subject to a special recovery period of seven years. California law does not conform to this provision. Use form FTB 3885A to figure the adjustment to make on Schedule CA (540 or 540NR). • Amortization of pollution control facilities Both California and federal law provide for accelerated write-off of pollution control facilities. California law only allows the write-off of facilities located in California. Enter the amortization for the California facilities on form FTB 3885A. Compare the California amortization to the federal amortization and enter the difference on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section B, line 3, line 5, or line 6, column C. • Expenditure for tertiary injectants incurred in the crude oil industry Federal law allows a deduction for the cost of tertiary injectants which are part of a tertiary recovery system. California law allows a depreciation deduction if the tertiary injectant qualifies as property used in a trade or business or is held for the production of income. Enter the amount of tertiary injectants deducted on your federal return on Schedule CA (540), Part I or Schedule CA (540NR), Part II, Section B, line 3, column C. Prepare a schedule reflecting the depreciation computation of tertiary injectants placed in service during the taxable year. Then complete form FTB 3885A and attach it and your depreciation schedule to your return. • Reduced recovery periods for fruit bearing grapevines replaced in a California vineyard on or after January 1, 1992, as a result of phylloxera infestation and on or after January 1, 1997, as a result of Pierce’s disease Federal law generally requires a 10-year recovery period for fruit bearing vines for purposes of accelerated cost recovery and a 20-year recovery period for those vines under an alternative depreciation system. California law allows 5 and 10-year recovery periods, respectively. Prepare a schedule reflecting the depreciation computation of grapevines placed in service on or after January 1, 1992, for phylloxera infestation, and placed in service on or after January 1, 1997, for Pierce’s disease. Then complete form FTB 3885A and attach it and your depreciation schedule to your return. • Income forecast method of depreciation For assets placed in service after August 5, 1997, federal law limits the income forecast method of depreciation to film, video tape, sound recordings, copyrights, books, patents, and other property to be specified by federal regulations. California conformed to this limitation for
Extracted from PDF file 2023-california-publication-1001.pdf, last modified November 2023

More about the California Publication 1001 Individual Income Tax TY 2023

In general, for taxable years beginning on or after January 1, 2015, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2015. However, there are continuing differences between California and federal law. Publication 1001 requires you to list multiple forms of income, such as wages, interest, or alimony .

We last updated the Supplemental Guidelines to California Adjustments in February 2024, so this is the latest version of Publication 1001, fully updated for tax year 2023. You can download or print current or past-year PDFs of Publication 1001 directly from TaxFormFinder. You can print other California tax forms here.

Other California Individual Income Tax Forms:

TaxFormFinder has an additional 174 California income tax forms that you may need, plus all federal income tax forms.

Form Code Form Name
Form 540 California Resident Income Tax Return
Form 540 Booklet Personal Income Tax Booklet - Forms & Instructions
Form 540 Schedule CA California Adjustments - Residents
Form 540-ES Estimated Tax for Individuals
Form 540-540A Instructions California 540 Form Instruction Booklet

Download all CA tax forms View all 175 California Income Tax Forms


Form Sources:

California usually releases forms for the current tax year between January and April. We last updated California Publication 1001 from the Franchise Tax Board in February 2024.

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About the Individual Income Tax

The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.

Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!

Historical Past-Year Versions of California Publication 1001

We have a total of five past-year versions of Publication 1001 in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:


2023 Publication 1001

FTB Publication 1001 Supplemental Guidelines to California Adjustments

2022 Publication 1001

2022 FTB Publication 1001 - Supplemental Guidelines to California Adjustments

2020 Publication 1001

FTB Publication 1001 2020 Supplemental Guidelines to California Adjustments

2017 Publication 1001

2017 Publication 1001 - Supplemental Guidelines to California Adjustments


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