Question 96 of 99.

Maria reported $800 on line 2a of her Form 1040. $600 was from New York municipal bonds and $200 was from Los Angeles municipal bonds. Which adjustment should she make on line 2 of her California Schedule CA (540)?

A) Add $800 in column C because only 20% of the interest is from California. B) Add $600 in column C because $600 is from New York bonds. C) Subtract $200 in column B for the California portion of the bonds. D) No adjustment is needed for municipal bond interest because it is tax-exempt interest.