Thanks, Robert! Yesterday, @AmyC replied to my original longer post (with background) advising me that my MI-4797 looks totally incorrect and that should all be taxable to MI and then I'll get a credit for NY. My problem is I don't think I owe tax to NY on my capital gains because they are offset by all my suspended losses now being realized as all my rental income and property tax and other expenses were allocated to NY for the past 5 years.
If I don't add that suspended loss on ordinary federal income back to my Michigan AGI on MI Schedule 1 I end up with much less Michigan tax owed and it just doesn't seem right to me. I have read the entire Michigan Tax Code chapter 206, instructions for all relevant MI forms, and the MI Treasury guide for professional tax preparers and still can't figure out if the suspended loss claimed against Fed AGI should be claimed against both MI and NY when the property sale was entirely in NY. Even though it is a "business asset disposition" this is not a qualified trade or business as MI defines it. I'll just keep reading because I'm still not confident.
