Yes, you are correct. The reason you must pay tax on the sale for your New York (NY) return is because all of your worldwide income must be reported to your resident state. Hopefully the following will clarify a little more.
The credit for tax paid to another state on the same income will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state
Since your resident state has a higher tax, you will pay the tax calculated for your state, however they will allow that subtraction for the amount you paid to the state where the land sale was situated (Indiana in your case).
@vankurtz
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