Hi,

Can anyone share a legitimate resource discussing the proper CA treatment of an ERC refund?  S-Corp received passthrough K-1 with the refund allocated to "Other Income" for federal, then CA "Other Income" adjustment creates a CA carryover loss.  This loss would not pass through to the S-Corp owner and be held at S-Corp level.  Wouldn't it be clearer to just include the ERC refund from the passthrough K-1 in Box 1 Ordinary income and then allocate CA adjustment.  Background: No amendment was done on original tax year and ERC refund was received in 2025.

Thanks!