Line 7 – Capital Gain or (Loss)

Generally, no adjustments are made on this line. California taxes long and short term capital gains as regular income. No special rate for long term capital gains exists. However, the California basis of the assets listed (within this line instructions) may be different from the federal basis due to differences between California and federal laws. If there are differences, use Schedule D (540), California Capital Gain or Loss Adjustment, to calculate the amount to enter on line 7.

Gain or loss from the sale of investments inside an HSA.

Gain on sale of qualified small business stock under IRC Section 1045 and IRC Section 1202.

Basis amounts resulting from differences between California and federal law in prior years.

Gain or loss on stock and bond transactions.

Installment sale gain reported on form FTB 3805E, Installment Sale Income.

Gain on the sale of personal residence where depreciation was allowable.

Pass-through gain or loss from partnerships, fiduciaries, S corporations, or LLCs.

Capital loss carryover from your 2023 California Schedule D (540).

Capital gain from children under age 19 or full-time students under age 24 included on the parent’s or child’s federal tax return and reported on the California tax return by the opposite taxpayer. For more information, get form FTB 3803.

Get FTB Pub. 1001 for more information about :

Disposition of S corporation stock acquired before 1987.

Capital gain exclusion for sale of principal residence by a surviving spouse.

Gain on sale or disposition of qualified assisted housing development to low-income residents or to specified entities maintaining housing for low‑income residents.

Undistributed capital gain for RIC shareholders.

Gain or loss on the sale of property inherited before January 1, 1987.

Capital loss carrybacks.