Asked by ejay
Larry received $268 of interest from an Arizona municipal bond. How is the municipal bond interest reported on his California return?
Report $268 on Form 540, line 14.
Report $268 on Schedule CA (540), Part I, Section A, line 2b, column B.
Report $268 on Schedule CA (540), Part I, Section A, line 2b, column C.
Municipal bond interest is not taxable on the California return. He is not required to report the municipal bond interest
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Report $268 on Schedule CA (540), Part I, Section A, line 2b, column C.
Reason: California taxes interest from out‑of‑state municipal bonds (Arizona bonds are taxable). On Schedule CA you add that tax‑exempt‑for‑federal interest back to your California income (column C). (Interest from California municipal bonds would instead be a subtraction in column B.)
Reason: California taxes interest from out‑of‑state municipal bonds (Arizona bonds are taxable). On Schedule CA you add that tax‑exempt‑for‑federal interest back to your California income (column C). (Interest from California municipal bonds would instead be a subtraction in column B.)
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