S Corp edearal state difference on for 8825

[Sracpa]

I am preparing an S corporation return with a federal and state difference related to a section 481(a) adjustment, (prior year depreciation difference when filing a form 3115). How do I record this federal and state difference on the form 8825 and the K-1. The federal 481(a) adjustment is recorded in other expenses on the federal return.

Thanks for you help.

[sjrcpa]

What state?

[Sracpa]

I am filing a California return.

Thanks

[George4Tacks]

https://www.ftb.ca.gov/tax-pros/law/ftb-notices/2000-8.html

I would make the state adjustment in Screen 44 > Calif Adjustment > Other Additions OR Other Deductions as "IRC 481 (a) difference on Form 8825"

[joshuabarksatlcs · Accepted solution]

I don't think Screen 44 would do the job.  The "Other additions" or "Other deductions" would adjust Form 100S Page 1, for the computation of the state tax.  The items would not be carried over to Sch K or the K-1's.

If I understand the issue correctly, the difference in 481 adjustment  would affect the State Sch K and thus K-1's, and there would be a difference on Sch /K-1 Line 2 (net rental real estate income).  Correct me if I'm wrong here.

If the above is correct, the problem is that there is NO separate column for state expenses on Form 8825 input.  Years ago, I made a request for a separate column OR add a separate item on the bottom for the state (currently the "State Amounts IF different" include only 4797, Amort, Depr and Tax)  There should be an Other addition or Deduction there).

If in fact you need to show a different amount for CA on the state Sch K / K-1, I would override the on the bottom  (State Amounts if different) for the depreciation line by the state depreciation plus or minus the 481 adjustment.  On the supplemental note, I would explain the federal state difference by stating

1.  General description for the 481 difference plus

2.  a recap:

Federal  depreciation       $xxx

State depreciation diff        yyy  (If this is applicable)

State 481 Adjustment        bbb

                                              -------

                                            $ zzzz 

                                               ===

[Sracpa]

Joshua

Thanks. Your analysis is correct and  will use your suggestion. I really appreciate your time.

Steve 

[joshuabarksatlcs]

By the way, under the approach in my earlier comment, the state difference (the 481 adjustment plus - if applicable - the federal/state difference) should be carried over to Page 1 of Form 100S automatically.  NO need to enter on Screen 44.  Double check this when you're done.

[joshuabarksatlcs]

Glad you found it helpful. 

My name is not Joshua.  Joshua was my dog when i set up the account (thus JoshuabarksatLCS).  I lost him shortly after that.  Boo Hoo....