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Step #5 from the following Turbo Tax explanation is confusing me. Could someone do a better job of re-wording?


Where to Find Your California Capital Loss Carryover
Look at your 2007 California Schedule D (540) and see if there are amounts on lines 8 and 9. If line 9 is smaller than line 8,
you may have a carryover. No difference means you don't have a carryover.
Follow these steps to figure the amount to carry over to 2008:
1. Start with your California Form 540 or 540NR, line 17.
2. Subtract Form 540/540NR, line 18 from line 17.
3. Take the difference from step 2 and add your loss from California Schedule D, line 11.
4. Compare the result with your loss on California Schedule D, line 8.
5. Subtract the smaller amount in step 4 from the amount on California Schedule D, line 8.
The result is your California capital loss carryover to 2008.



Example numbers one can use to show how to figure it out:

2007 info:
CA Schedule D line 8 --> -100000
CA Schedule D line 9 --> 3000
CA Schedule D line 11 --> -3000

2007
CA 540 line 17 --> 50000
CA 540 line 18 --> 5000

Thanks!
V
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I was doing the step one at a time for you...No Go!

Went to the form
I think you messed up on a CA schedule D item

http://www.ftb.ca.gov/forms/2008/08_540d.pdf


If you had Line 8 -100000,
there is no way line 9 can be 3000, since 3000 > -100000 and it asks you
to enter smaller number i.e. -100000



Hohum
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Hohum,
Take line 8 as an absolute in this case. The negative since is to indicate it's a loss...
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So lets go step by step...

1) $50K
2) $45:
3) $48K
4) not sure exactly what is needed here since it says Compare....
$48K vs a loss of $100K

5) $52K????
Your 2008 carryover is $52K?
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Hohum,
Take line 8 as an absolute in this case. The negative since is to indicate it's a loss...


Nope, look at the instructions for line 8.

A gain in line 8 skips line 9, sends you to line 10

Tax Instructions need to be followed, else things contradict
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Hohum,
I way I took it is this:

Line 8 is the loss of $100K
Line 9 is the most you can deduct per year filing jointly therefore you have a loss to carryover for 2008. Then start with steps 1-5.

The reason step 5 doesn't make sense to me is why would your carryover reduce so greatly? Doesn't make sense if I'm interpreting the instruction correctly, which begs the question...am I understanding it correctly?

V
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BTW, you only go to CA Sch D if you have different losses than Federal losses, do you?


Hohum
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I was just following Turbo Tax...
what lines do I need to look at from 2007 for Fed and CA to verify?
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1) $50K
2) $45:
3) $48K
4) not sure exactly what is needed here since it says Compare....
$48K vs a loss of $100K

NO. It says to compare $48K to a loss of $3K. A $3K loss is smaller than $48K so..

5) $52K????
Your 2008 carryover is $52K?


Your 2008 carryover is $97K.

Ira
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Ira,
Thanks!
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I was just following Turbo Tax...
what lines do I need to look at from 2007 for Fed and CA to verify?



I think that would be in the instructions for Schedule CA.
Schedule CA reconciles Federal and CA Income and deductions.
I believe, if there's no adjustment on line 13 for Schedule CA, then CA follows Fed, and you just have to follow Fed Capital Loss Carryover.

http://www.ftb.ca.gov/forms/2008/08_540cains.pdf
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Let me save you a boatload of time.

In 99% of the cases, your CA capital loss carryover is the total of your Federal short and long term loss carryovers.

The only time it might be different is when you know that you had a different amount for CA purposes on one of your capital gains/losses, such as selling real estate or something similar.

If you're only dealing with stocks, bonds, and mutual funds, the Federal and CA numbers are probably the same.

--Peter
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Peter,
I did sold real estate in 2007 and with all cost and depreciation taken in, end up with a little gain. I had a CPA did my tax for 2005-2007 when I owned this property as an investment with another paper. Didn't want to risk get audited with all the complication involved. Decided to take care of tax this year myself since she charges me an arm and a leg...plus I'm unemployed! ;-)

Hmmm...both Fed and CA capital loss carryover started out differently but both end up with the same # for line 16 for 1040 Sch D and line 8 of CA Sch D (right lines to compare to?). So if both # are the same, why would Turbo Tax make me go through all this headache? Shouldn't it just transfered the amount automatically over for me?

Thx
V
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I did sold real estate in 2007 and with all cost and depreciation taken in, end up with a little gain. I had a CPA did my tax for 2005-2007 when I owned this property

Fed and CA law were the same during that time frame. So the capital gain on the property should have been the same for Federal and CA purposes.

Hmmm...both Fed and CA capital loss carryover started out differently

Remember that Fed needs to have the carryover split between short and long term. CA doesn't have that distinction, so it's just a single number that carries over from year to year. As I said before, in the vast majority of cases, the CA carryover is simply the total of the Fed carry overs.

but both end up with the same # for line 16 for 1040 Sch D and line 8 of CA Sch D (right lines to compare to?).

Yes, those are the comparable lines.

So if both # are the same, why would Turbo Tax make me go through all this headache? Shouldn't it just transfered the amount automatically over for me?

Turbo Tax can't just automatically transfer the number for you, since it is quite possible (although fairly rare) for the carryover to be different for CA purposes. It needs to be able to handle that possibility.

--Peter
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Peter,
thanks again!!!!
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