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Grants paid to low-income individuals. California excludes grants paid

California and federal laws allow gambling losses only to the extent you

to low-income individuals to construct or retrofit buildings to make them

report gambling income. If you reduced gambling income for California

more energy efficient. Federal has no similar exclusion. Enter on line 21f,

lottery income, you may need to reduce the losses included in the federal

column B the amount of this type of income.

itemized deductions on line 38. Enter these losses on line 41 as a negative

number.

Health Savings Account (HSA) Distributions for unqualified medical

expense. Distributions from an HSA not used for qualified medical

b. Disaster Loss Carryover from form FTB 3805V, Part III, line 6

expenses and included in federal income, are not taxable for California

If you have a California disaster loss carryover from your 2006 form

purposes. Enter the distribution not used for qualified medical expenses

FTB 3805V, Net Operating Loss (NOL) Computation and NOL and Disaster

on line 21f, column A and column B.

Loss Limitations – Individuals, Estates, and Trusts, enter that amount as a

positive number in column B.

Coverdell (ESA) Distributions. If you received a distribution from a

Coverdell ESA, report only the taxable amount of the distribution on

c. Federal NOL from Form 00, line 2

line 21f.

If the amount on line 21 in column A includes a federal NOL, enter the

amount of the federal NOL as a positive number in column C. Get form

California National Guard Surviving Spouse & Children Relief Act of

FTB 3805V to figure the allowable California NOL.

200. Death benefits up to $10,000 received from the State of California

by a surviving spouse/RDP or member-designated beneficiary of certain

d. NOL Carryover from form FTB 3805V, Part III, line 5

military personnel killed in the performance of duty is excluded from

The allowable NOL carryover under California law is different from the

gross income. Military personnel include the California National Guard,

allowable NOL carryover under federal law. Use form FTB 3805V to figure

State Military Reserve, or the Naval Militia. If you reported a death benefit

the allowable California NOL and enter it as a positive number in column B.

on line 21, column A, enter the death benefit amount in column B.

e. NOL from FTB 3805D, FTB 3805Z, FTB 3806, FTB 3807, or FTB 3809

Ottoman Turkish Empire Settlement Payments. If you received

Enter in column B the total NOL figured on the following forms.

settlement payments as a person persecuted by the regime that was in

• FTB 3805D, Net Operating Loss (NOL) Computation and

control of the Ottoman Turkish Empire from 1915 until 1923 your gross

Limitation – Pierce’s Disease.

income does not include those excludable settlement payments, or

• FTB 3805Z, Enterprise Zone Deduction and Credit Summary, line 5b.

interest, received by you, your heirs, or your estate for payments received

• FTB 3806, Los Angeles Revitalization Zone Deduction and Credit

on or after January 1, 2005. If you reported settlement payments on

Summary, line 3b.

line 21, column A, enter the amount of settlement payments in column B.

• FTB 3807, Local Agency Military Base Recovery Area Deduction and

Mortgage relief upon sale or other disposition of principal residence.

Credit Summary, line 5b.

For taxable years 2007 through 2009, federal law allows an exclusion

• FTB 3809, Targeted Tax Area Deduction and Credit Summary, line 4b.

of income from discharge of indebtedness from the disposition of your

f. Other (describe)

principal residence. If you were personally liable for a mortgage and you

Reward from a crime hotline. Enter in column B the amount of a reward

were relieved of liability for the mortgage indebtedness by disposition of

authorized by a government agency received from a crime hotline

the property then you may have realized a gain. To the extent the amount

established by a government agency or nonprofit organization and that is

discharged exceeded the fair market value at the time of disposition,

included in the amount on line 21 in column A.

the difference is income from discharge of indebtedness. See federal

Publication 544, Sales and Other Disposition of Assets, for more

You may not make this adjustment if you are an employee of the hotline or

information. If you excluded income from the discharge of indebtedness

someone who sponsors rewards for the hotline.

on your federal return enter the amount in column C.

Federal foreign income or housing exclusion. Enter in column C the

Hokie Spirit Memorial Fund exclusion. Enter in column C the amount

amount deducted from federal income on Form 1040, line 21.

excluded from federal income. For more information, get FTB Pub. 1001.

Beverage container recycling income. Enter in column B the amount of

recycling income included in the amount on line 21, column A.

Line 22a – Total

Add line 7 through line 21f in column B and column C. Enter the totals on

Rebates or vouchers from a local water agency, energy agency, or

line 22a.

energy supplier. California law allows an income exclusion for rebates

or vouchers from a local water agency, energy agency, or energy supplier

Line 22b – Balance Carried Forward

for the purchase and installation of water conservation appliances and

Enter the totals from Side 1, line 22a, column B and column C.

devices. Enter in column B the amount of this type of income included in

Line 23 through Line 35

the amount on line 21 in column A.

California law is the same as federal with the exception of the following:

Original issue discount (OID) for debt instruments issued in 985 and

• Line 23 (Educator expenses) – Enter the amount from column A, line 23 in

986. In the year of sale or other disposition, you must recognize the

column B, line 23.

difference between the amount reported on your federal return and the

• Line 24 (Certain business expenses of reservists, performing artists, and

amount reported for California purposes.

fee-basis government officials) – If claiming a depreciation deduction as

Issuers: Enter the difference between the federal deductible amount and

an unreimbursed employee business expense on federal Form 2106, you

the California deductible amount on line 21f in column B.

may have an adjustment in column B or column C.

Holders: Enter the difference between the amount included in federal

gross income and the amount included for California purposes on line 21f

If you filed a federal Form 2106, Employee Business Expense, or

in column C.

Form 2106-EZ, Unreimbursed Employee Business Expense, you may have

an adjustment in column C.

Foreign income of nonresident aliens. Adjust federal income to reflect

worldwide income computed under California law. Enter losses from foreign

• Line 25 (Health Savings Account (HSA) Deduction) – Federal law allows

sources in column B. Enter foreign source income in column C.

the taxpayer a deduction for contributions to an HSA account. California

does not conform to this provision. Transfer the amount from column A,

Cost-share payments received by forest landowners. Enter in column B

line 25, to column B, line 25.

the cost-share payments received from the Department of Forestry and

Fire Protection under the California Forest Improvement Act of 1978 or

• Line 29 (Self-Employed Health Insurance Deduction) – Most people do

from the United States Department of Agriculture, Forest Service, under

not have any entry in column B or column C.

the Forest Stewardship Program and the Stewardship Incentives Program,

Enter on line 29, column C, the amount paid for health insurance coverage

pursuant to the Cooperative Forestry Assistance Act.

(established under your business) for your registered domestic partner

Compensation for False Imprisonment. California excludes

and their dependents. Your total California deduction cannot exceed the

compensation for false imprisonment from income. Enter the amount of

limitations explained in the federal instructions. Do not include health

compensation on line 21f, column B.

insurance costs for any month you were eligible to participate in any

subsidized health plan maintained by you or your registered domestic

partner’s employer.

Schedule CA (540NR) Instructions 2007 (REV 06-08) Page 5

Instructions For Schedule Ca (540nr) - California Adjustments - Nonresidents Or Part-Year Residents - 2007 Page 5

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