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Level 2
posted May 11, 2020 8:08:13 PM

Capital Gain from Sale of Business in Louisiana

I owned a home in Louisiana for 30-40 years.  When my husband died, and I moved away in 2013, I rented the house out for income.  I sold the house early in 2019.  I feel confident that I have correctly accounted for the income, depreciation, sale, etc. but, in the course of filing my Louisiana state return, the “Capital Gain from the Sale of a Business” deduction came up.  The TurboTax software references LA Revenue Information Bulletin No. 10-017 as the basis for deciding whether I qualify for this.  The applicable paragraphs of that bulletin read:

 

"Louisiana Revised Statutes 47:293(9)(a)(xvii) and 47:293(10) provides an individual income tax deduction for net capital gains, limited to gains recognized and treated for federal purposes as arising from the sale or exchange of equity interests in, or substantially all of the assets of, a non-publicly traded business commercially domiciled in Louisiana.  For purposes of computing this deduction, the following terms are defined and explained:"

 

...and the subsection that seems to address my situation reads (in full):

 

"Sale or Exchange of Substantially all of the Assets of a Business - a sale or exchange of assets that would allow the buyer of the assets to continue the business. A sale or exchange of assets is presumed to be a sale or exchange of substantially all of the assets of the business if the selling business transfers at least 90% of the fair market value of the net assets and at least 70% of the fair market value of the gross assets that it held immediately before the transfer."

 

Since the sale of the house constitutes "substantially all of the assets" of the rental business I have been conducting for the past several years, it seems that I qualify.  I am looking for advice from someone familiar with Louisiana state returns, to confirm this or correct me if I am wrong.

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1 Replies
Expert Alumni
May 18, 2020 1:31:41 PM

The question comes down to whether your rental property constitutes a "business organization commercially domiciled in this state". 

 

Nothing in the statue, the Revenue Information Bulletins 0-017 and 16-039, or the Louisiana Form R-6180 instructions specifically addresses that question, nor specifically excludes a rental activity from eligibility for the credit.

 

For certainty, you will need to call the Louisiana Department of Revenue for guidance, or a tax professional who is familiar with this issue.