This client qualifies to take the Section 121 exclusion for the sale of their home on their federal return. Why is the gain from the sale showing on the CA schedule CA as an addition?
If the federal Section 121 Exclusion is not printed on the federal Form 8949/Schedule D, Drake Tax does not carry the federal exclusion to Form CAD. Unless the Section 121 exclusion carries to CA Form CAD, the amount of gain shown on the CA Schedule CA will not decrease.
To force the exclusion to print on Form 8949/Schedule D, you will need to check the box that states Force exclusion or loss adjustment to be printed on Form 8949/Schedule D on the federal screen HOME, located on the Income tab data entry.
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