Good morning everyone,

Here's my case:

In 2021, my clients had a rental loss of 900k. She qualifies as a real estate professional and he's working full-time. Thus, the loss becomes active rather than passive. Because of Section 461 (l), the amount of losses they can deduct on their federal return is capped at 524k (MFJ).

However, for the CA return, ProConnect adjusts and add the difference to their AGI. Therefore, it lets them deduct the full amount of their rental loss.

I'm not sure if it is a system glitch in ProConnect. Do you guys think it is right?

Best