Here is your Lacerte help article:

https://proconnect.intuit.com/community/taxation/help/entering-the-employee-retention-credit/00/1217...

"Please don't quote another CPAs website as tax law source."

It's not offered as Law; it's a web Reference, with text content and links. It includes the direct links. I am very careful about sourcing, as you see in my comments about Dates. I use that table as reference only after confirming via other means. That's why I know it is current to the recent SB change for SVOG, even though the date at the top still is May 2021.

"I could not find anywhere on Cal FTB website where it stated that ERC was taxable income in California. If you are sure that ERC is taxable income in California, please reference the CA FTB law that states this."

Are you sure this isn't Semantics vs Mechanics? Taxable income by Expense Disallowance.

First, it's typically the other way around; you would need to prove grants and/or business income is not taxable. Example from Form 100 instructions for Line 15:

"Small Business COVID-19 Relief Grant Program. California allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the COVID-19 Relief Grant under Executive Order No. E 20/21-182 and the California Small Business COVID-19 Relief Grant Program established by Section 12100.83 of the Government Code. If the corporation included any amount as income for federal purposes, deduct the amount on line 15."

Second, CA has no such credit. That's why there is the nonconformity difference in the deductibility clause(s). That deduction is what offsets the reportable income; which is how they state it in that table, too:

"The credit is taxable for Federal purposes, which is achieved by reducing the wages deduction by the amount of credit taken.

The refund is taxable for California and the expenses are deductible."

Do you read Spidell:

https://www.caltax.com/forums/topic/erc-refund-taxable-upon-receipt-or-nontaxable-fed-ca/

And:

https://www.ftb.ca.gov/about-ftb/data-reports-plans/Summary-of-Federal-Income-Tax-Changes/index.html

I recommend scanning using a Search for "retention" and for "ERC." There are multiple acts that affect ERC.

Which is referring to the IRS, which is the worst moving target of all of them, seen here:

https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

https://www.irs.gov/newsroom/employee-retention-credit-2020-vs-2021-comparison-chart