California tax on sale of inherited property

[parthaca]

I am a California resident. The sale of an inherited property in India, held for over 10 years, resulted in capital gains. I paid capital gains taxes in India. This capital gain has to be declared on the federal return but I can take a foreign tax credit for taxes paid in India. My question is about California state tax return. California treats capital gains as regular income. So I would have to declare these gains as income. What is not clear if there is a provision to take credit for taxes paid in India as in the federal return. There is mention of credit for taxes paid in other states here: https://www.ftb.ca.gov/forms/2022/2022-540-s-instructions.html but no mention of foreign tax. Is there some other provision to take advantage of taxes paid to other jurisdictions in California?

[tagteam]

@pk ?

[pk · Accepted solution]

@parthaca , Namaste.

Unfortunately  most  US states do not recognize the "double Taxation" clause  of US-Tax Treaties.   Thus  you are left  with the double taxation  when a state  taxes  world income  but does not recognize  taxes  paid to another country.     California has no recognition of taxes paid to another country.   My suggestion would be  call the California FTB   and  may be enough people call, they will recognize this  issue .

Namaste ji

pk