Utterly fried on CA passive loss adjustment for RE pro

[joanmcq]

I'm working on an RE professional return and am just blank looking at the CA passive loss adjustment on Sch CA. (For those of you in other states, CA doesn't follow federal in allowing RE pro for rentals; only the $25k active participation is allowed).

Since this was a DIY since 2006, to satisfy myself that everything is kosher, I've been recalculating all this guy's carryforwards; NOL, AMT NOL, CA NOL and the Fed/CA passive loss adjustments-especially since none of the CA carryforwards from his prior year's returns are correct. When the rentals only had losses, it was fairly straightforward, but for 2010 he has a ton of income on one rental, and smaller losses on the others. From earlier years he has over $100k of CA passive losses. On the federal return, the rentals net to a $10k loss.

So I've worked through the detail tab on Form 3801, and ATX is carrying over from the federal no losses on any of the properties. all of the worksheets show zero for federal---well for federal they aren't passive. And the program brings to the Sch CA $25000 to the subtraction column. Since for federal, he is still getting to take a 10K loss, shouldn't the adjustment only be an additional $15k?

For the earlier years, I worked out the loss allocations using a spreadsheet. Because one rental has income, my spreadsheet isn't working properly. I've been working on these calculations on and off for weeks now, and I am so close to getting the 2011 return done.

Oh, and just to complicate the calcs, he has a nonpassive S-corp loss too.

[Lion EA]

OK, that settles it. I am NOT retiring to CA!

[kcjenkins]

I'd just suggest that you send a personal message to Bulldog Tom. He's really sharp and he's in CA so he will be familiar with those crazy CA adjustments, Plus he's a really sweet guy who is often willing to share his knowledge.

[joanmcq]

I was hoping to get jainen in on this too.

[jainen]

>>I was hoping to get jainen in on this too.<<

Yikes!!

[joanmcq]

Darn, is that all you can say? yeah, this is a mess, but I'm sooooo close to getting the 2011 return done.

A bit more info:

The CA 3801 has on line 1a $85330

Line 1b ($95,455)

Line 1c (777,570)

Line 9 $25000 (allowable loss)

Line 10 $85330 (total income)

Line 11 $110,330 Total allowed losses

Sch CA

Line 17 column A ($59,369) This is ($49,244 of S-corp losses, plus the federal ($10,125) of rental losses.

Column B ($25,000)-brought over from the 3801 by ATX.

Column C- I have a feeling I should offset column B by putting in $10,125. But my brain is fried by this point. Although sleeping on it helped.

I had to go back to 2005 and correct all of the carryforwards-it's been truly icky. NOLs, CA NOLS, biz credits, contribution c/fs, and the passive losses. This is really the first return where I've had years of fed/CA differences on rentals other than depreciation...only client that has ever qualified as an RE pro.

Oh, and if you want to know just how complex 2011 really will be for CA---client is a same-sex couple that got married in 2011 (different state, so they are married, not RDP).

:spaz:

[jainen]

>>is that all you can say?<<

Actually, it's MORE than I would have said if I had known about the marriage. But now that I'm committed to the thread, I'll suggest that you do these forms by hand. After you get numbers that make sense from all directions, re-enter or override the computer data.

[joanmcq]

Yup, that's pretty much what I had to do. Especially the CA AMT NOLs. This one rings the bell as the most charged for a single year tax return-even if you don't include his husband's return. But in comparison, next year should be a piece of cake.