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California Differences - Investment Interest

California conforms to the Federal treatment for investment interest, although the amount deductible may be different because of differences in tax-exempt interest and deductible expenses (California does not conform to the TCJA suspension of Tier 2 miscellaneous deductions). Also, since California does not have preferential tax rates for capital gains or dividend income, it may be advantageous to make a separate election to treat net capital gains and/or dividends as investment income when the election has not been made for federal purposes. 

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