My client is a CT resident and received a K-1 showing a passive loss of ($6,000) federal. The CA K-1 column (d) (Amount using CA law) is ($20k). The CA K-1 column (e) (CA source amounts and credits) is $(5k).
It's my understanding that it is best practice to account for this loss and report it to CA to offset potential CA source passive income in the future. After reading the CA instructions, it states nonresidents must complete form 3801 twice. I have seen this done once or twice before by other larger firms using different, more advanced software it seems. (Typically the form 3801 will say "All sources" at the top, then the second copy will say "CA amounts."
Question: Why doesn't Proseries complete the form twice as directed in the instructions? If it can only be filled out once, how would I be able to show the ($5k) loss as the CA source PAL carryover rather than the full $20k loss recalculated using CA law?
My head is spinning.
I should note, I just saw that the Proseries help tab in the program for Form 3801 states that "the program does not support calculating Form 3801 a second time using only CA activities." Are we supposed to manually prepare and attached it? Seems like a major item for Proseries not to calculate this, no?
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