51591
The following diagnostic is generating:
Average gross receipts are in excess of $5 million dollars. For California purposes the accrual method of accounting must be used. If wishing to continue to use the Cash method of accounting for Federal purposes, a copy of the return should be made and the accounting method changed to accrual in the return that will be used to file the California return.
Solution:
Critical but does not start with e-file Screen 4.1>Miscellaneous>Qualified personal service corporation (code 10) checkbox will clear but should only be checked if that is correct for the return Averages amounts in Screen 32>Part I - Gross Receipts for the Preceding Tax Years Article 000052447 California Nonconformity to Federal Tax Reform Reference for Business Returns corporations (and partnerships with corporate partners) generally may not use the cash method of accounting if their average annual gross receipts exceed $5 million. An exception to this $5 million rule is provided for qualified personal service corporations. A qualified personal service corporation is a corporation (1) substantially all of whose activities involve the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts or consulting, and (2) substantially all of the stock of which is owned by current or former employees performing such services, their estates, or heirs. Qualified personal service corporations are allowed to use the cash method without regard to whether their average annual gross receipts exceed $5 million
