CA sch D/3885A

[Steve M]

Anyone from California may be able to answer this question. I am an Az preparer and have been doing taxes for an individual in Ca for several years. He recently received a notice from Ca that he owes a bunch of money bacause the Ca sch D is not to be used for Ca residents with capital gains. All of his stock sales populated to that form and were removed from Ca income. I assumed I had opened that form in error.

Now I did a return for a retired individual who moved to Ca from Az, and it still opened automatically. Is it supposed to or is this an error that ATX should correct? Would just like to know.

Steve M

[jainen]

>>Ca sch D is not to be used for Ca residents with capital gains<<

This is an adjustment form for when Ca gain/loss is different from federal gain/loss. You wouldn't expect that in the case of a resident selling stock. (Real estate and other property sometimes has a different basis due to depreciation or other factors.)

Including an unnecessary form should not in itself be a problem, but apparently you didn't make sure all the sales were correctly reported on it. You'll have to make some lame excuse about your software or something, and apologize profusely. With luck the Franchise Tax Board will accept the same excuse (coupled with affirmations of future compliance) and abate the penalties.

[BulldogTom]

Steve,

It is a quirk in the software for CA. I don't call it a flaw because it is like the Alt Min form coming up automatically, even if you don't need it.

The error check in ATX will tell you that if basis is the same, don't use the CA D. I am not sure why the amounts changed on your income, as it generally just populates and gives the same income figures. The one thing that will screw with you is a new client with a Capital Loss Carryforward. Entering the amounts into the Federal D does not get them into the CA D and will cause more income in CA.

I would go back and check the form for the previous years and find out why the income changed. I can't remember it happening to me.

Tom

Lodi, CA

[joanmcq]

Its a pain that it opens automatically, even when not needed. Since its a form I charge for, I'm constantly checking and deleting it if necessary. But its better that it populates unnecessarily than how it was a few years ago when it had to be filled in manually, including for depreciation differences!