I am filing a non-resident return for Arizona to report Arizona sourced income and the NR-140 pulls capital gains from the 1040 into the smart worksheet. These gains are from the sale of investments and have nothing to do with rental income, thus they are not Arizona-sourced. I had entered $0 when asked for Arizona sourced capital gains earlier in the software.
I believe the number on Line 37 of the form should be $0 as the capital gains are not Arizona sourced but the only way to achieve this is to say that the gains were acquired before 2012.
Is this the correct way to handle this?
TT does not appear to have the appropriate level of support to complete a state tax return correctly as there is no way to differentiate Arizona-sourced and cap gains in this portion of the step-by-step.
I found another entry from 2022 indicating this has been a longstanding problem that has yet to be addressed.
