Capital gains arise from the sale or exchange of capital assets and are recorded on federal Form $8949,$ categorized as short$-$term or long$-$term based on their holding period. Occasionally in California, adjustments are required on Schedule D $(540)$ when there are differences between federal and state calculations. Which form should a taxpayer use to report capital gains in California when discrepancies with federal reporting exist?

a$)$ Report all capital gains and losses on federal Form $8949,$ using California Schedule D only when adjustments are necessary due to specific state$-$related discrepancies $($Property inherited before $1987).$

b$)$ Report capital gains only on federal Form $8949,$ without any state$-$specific adjustments.

c$)$ Use federal Form $8949$ for reporting, and duplicate all information on California Schedule D$,$ regardless of discrepancies $.$

d$)$ Report all capital gains and losses directly on California Schedule D$,$ ignoring federal classifications.