bonus depn on LLC return
We filed 2021 LLC tax return for AZ State LLC . The business is a hotel that is in the state of AZ. Ca FTB wants us to file a CA LLC tax return since the member manager lives in CA state. We prepared the CA LLC return showing income allocation of 0% sourced to CA and 100% sourced to AZ state. We paid the $800 FTB tax upon filing.
This LLC had large amount of new assets additions on which we took Bonus depn. AZ state allowed the bonus depn, but the CA state does not allow bonus depn. On the CA state k-1, CA income is higher than Federal income by the amount of the bonus depn. This bonus depn difference shows on Ca k-1 Line 1 ( c ) and col ( d) that says "amounts using Ca law" shows higher income. Col ( e ) shows $0 as "CA source income".
Question:
Will the member manger who is a resident of CA report income as shown on Line 1 Col (d ) i.e., higher income due to Bonus not allowed by CA even if the hotel had 100% income sourced from AZ state ? This does not seem fair. Is this correct ?
