Below is the response from Lacerte.  The explanation seemed to be in line with the IRS (and CA- conformed) requirement of reporting the tax basis.  (@VickyO was correct.)   

Line 3 of Sch M-2 is now the tax income (Line 9 of Sch 1) and not Line 1 as in the past.   If you report Sch L with book and not tax basis (or Sch L for CA with Fed or book basis) for the capital account, act accordingly.    

Hello 

Per the California Schedule K-1 instructions, starting in 2021, the capital account must be kept on a tax basis.  It also goes on to say that the amounts on Schedule M-2 should equal the total of all the amounts reported on the K-1 capital account specifically columns C, D and E.  On the return that was attached, there was a large difference due to bonus depreciation being taken on the Federal but not on the state return.  An M2 adjustment for other decreases will need to be made for this on the California return.

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