Question

Which of the following statements is incorrect regarding deductible business expenses on a California return?
California allows a deduction for certain entertainment expenses, but they are subject to a 50% limitation.
California does not conform to the qualified business income (QBI) deduction.
California prohibits a deduction for business expenses incurred at a club that discriminates.
There are no differences between the California and the federal treatment of section 179 deductions.

Answer 1

The incorrect statement is: "There are no differences between the California and the federal treatment of section 179 deductions."

Explanation: California does not fully conform to federal §179/bonus depreciation rules — there are differences in limits and timing (California has its own rules and limits and does not conform to some federal changes). The other three statements are correct: CA generally allows certain entertainment deductions (subject to a 50% limit), does not conform to the federal QBI deduction, and disallows deductions for expenses at discriminatory clubs.