Thank you for your response. My client is a resident of FL.  He is also reporting currency losses from the exchange between CA and the US.  There does not seem to be an intuitive place on Screen 35.1 - unless its other foreign source income. He did not have taxes CA withheld on the sale in CA of the stock - I am trying to increase his foreign source income to use his FTC carry forward. Therefore I don't think I need to make a capital gains adjustment .  I find the instructions to Form 1116 vague and confusing.  Thank you!