Properly Source the Income to the Other State

1. Go to the Schedule E or 8825 input screens.

2. Set the "State Use Code" or "State Code" to the other state (e.g., TX, AZ).

3. Use the Multi-State Input screen and allocate all gross income and expenses to the non-CA state.

4. Under the “CA Schedule IW” input section, ensure that the rental income is marked as non-CA source