CA LLC Tax that is nondeductible (usually $800) and CA LLC fee that is deductible. Please see below for all the steps needed to handle this tax on the CA form 565/568. Note that I will refer to the nondeductible LLC tax below as the $800 tax, but this can vary as for cash basis taxpayers sometimes it is $1,600, for example, if it is paid twice during a year.
1. Go to CA/Return Options/Compute Options and check boxes shown below.
2. Fix the Schedule K so that the $800 tax flows to the adjustment column as shown below.
Go to CA/Federal Overrides and navigate to the section where you input the $800 tax deduction for Federal return purposes. In this example, we will navigate to the rental activity, Form 8825 detail for Taxes, then type NONE for on the row where the $800 tax was input for Federal. Both Federal and CA input are shown below.
Federal:
California:
3. Fix the Schedule K-1 Line 18C Nondeductible expenses so it reflects the $800 adjustment. Go to CA/Federal Overrides/Schedule K/Other. Input the $800 in Column D amount.
4. Next, fix the CA M-1 so that the right amounts flow to Lines 4c and 4d as shown below. Note that in this return, the $800 fee is the only adjustment for M-1 Line 4. Where we input NONE here, if there are other Line 4 adjustments in your return, please input the appropriate amount.
Go to Federal Overrides/Schedule M-1 and M-2/Reconciliation. See inputs below:
