I have a new client that has a passive loss carryover from Schedule C. Drake software is not allowing the carryover for the CA tax return stating CA does not allow. I can't find in CA regulations where CA does not allow a carryover passive loss from previous year. It makes no sense to me that CA allows the current year passive loss but does not allow previous year loss to carry forward. Drake programmer is stating the program is correct, but I disagree. Taxpayer was not passive for 2018 or 2019. The passive loss was from earlier year. Any input would be appreciated.
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What does the CA law state how it is handled? Then get back to the programmer if they are incorrect.Always cite your source for support to defend your opinion -
Is the taxpayer a real estate professional by any chance? Can you provide example numbers for CA Form 3801, maybe someone with Drake or different software can confirm your result. CA generally conforms to IRC ยง469 but there are several exceptions."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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Taxpayer is not a real estate professional. Taxpayer had passive loss from Schedule C from previous year (prior to 2018). 2018 CA 3801 shows:
Line 2c (prior year unallowed loss from worksheet 2, column (c) - (10,000)
Taxpayer still has business but business was non passive for 2018 and 2019. Drake is stating the carryover from previous year can only flow to 3801 if the business is passive for 2019. I know this is not correct, but can't find anything specific in CA instructions that I can take back to Drake.....way too much time invested in this and Drake is not helpful at all!!Comment
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Have you looked at: (looks very involved - try comparing the worksheets with your software result)
https://www.ftb.ca.gov/forms/2018/18...erview-of-FormLast edited by TAXNJ; 03-10-2020, 08:23 PM.Always cite your source for support to defend your opinionComment
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