Hello Dave F1006,
Thank you for your thoughtful response to my question. I think what you are saying is that there is reciprocity between California and Oregon and that I do not need to figure out the amount of credit I would put into my California return because TT will figure that out as long as I file the tax returns in the right order? But there is still some confusion based on a quote from the link you provided and what you stated in your response regarding the order in which to file your state taxes. Here is what your link stated:
"While TurboTax can certainly compute this tax situation correctly, it can be tricky. The "ordering" sequence of state tax preparation is crucial. In order to take the state tax credit correctly, for the double-taxed income, you would want to complete your federal return first, your Oregon resident return second, and then your California nonresident return third."
This is what you stated in your response:
"According to this Turbo Tax article, you are taxed on all worldwide income so this sale is also taxable in Oregon. Now when you report your State returns, you will prepare your California non-resident return and then your Oregon resident return. Since you are paying capital gains in both states, you are given credit for the capital gains tax in California reducing the taxable amount to zero, if you reported this correctly in both states."
Do you see how each statement is different regarding the particular order in which to file the state taxes? Also I do not understand why TurboTax would not explain this to users who are filing two separate state tax returns especially if it would effect the amount of credit they would get in one state for capital gains filed in both states.
Also I believe that in your first paragraph shown below, the link that you referenced is talking about the exchange of "Like Property" and not the sale of a primary home in your non-resident state. Here is your reference:
"According to the State of California, this document states If you are a nonresident and exchange real or tangible property located within California for real or tangible property located outside California, the realized gain or loss will be sourced to California. Taxation will not occur until the gain or loss is recognized."
I believe that you can only exchange "like property" when they are rentals or homes used as investments and not the sale of your primary home. I could be wrong on this but I thought I read this somewhere.
Anyway, I appreciate you taking the time to answer my questions.
Cindy2
