I have a client that has a frachise business for 15 years. Her business made money  in prior years. She had a FEDERAL NOL Loss of about $20,000 in 2019, and $5,000 in 2020. On the CA Adjustments - Residents Schedue CA(540) it is adding the $20,000 carryforward loss from 2019 back as addition. This is all that she had. She had no other taxable income. My understanding is that CA AB85 signed by Newsom 06/29/2020 suspends the use of NOLs for tax years beginning 2020,2021 and 2021 but only for individuals and corporations that have over $1M in taxable income.

This client clearly does not have taxable income. Why is it adding the $20,000 carryforward loss from 2019 back on CA?

Thank you for any clarification.