Why is it possible that capital gains reported on the federal tax return may need to be adjusted on the California tax return?

Select one:

a. Since California and Federal rules on depreciation differ, an adjustment to reported Federal capital gains may be necessary. California methods of calculating depreciation do not always follow Federal methods.

b. Since California and Federal rules on the initial cost basis of a purchase differ, an adjustment to reported Federal capital gains may be necessary. California methods for calculating the initial coast basis of property does not always follow Federal methods.

c. Since California and Federal rules on what qualifies as a capital asset differs, an adjustment to reported Federal capital gains may be necessary. California methods do not always recognize a capital asset the way Federal methods do.

d. None of the above are correct. The possibility of an adjustment between California and federal is so slight, that is not worth discussing here.