In the year of their move, California will only tax income earned that is either "California-sourced" (that is, derived from California regardless of where they live), or that is earned after moving and establishing residency in California. That year your parents will be part-year residents of California, and so California will not tax income that is derived from Washington prior to moving to California. That means that the Roth conversion prior to their California move is not taxable to California, and the sale of their home (which might not be taxable anyways, if it is the sale of their primary residence for which they've lived in for more than 2 of the last 5 years), is not taxable in California regardless if sold before they officially move there. These are the rules for a part-year resident of California. Click here for more information.
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