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For California State taxes declaring capital gains on real estate:
There's a point where there's a choice of choosing "Sale by Sale" or "Choose by allocation if you know the amounts". When I chose the first one it did not carry the capital gains amount over to column E on form CA (540NR). Each option gives me a different amount of taxes that I would have to pay. It is not clear to me which option I should choose. It would have been nice if TurboTax had explained the options better because this has caused me a lot of angst. Can you please shed some light on this. Thank you.
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The Total Amount option requires that you allocate that portion of the gain you received while a non-resident of California and that portion of the gain you received while a resident of CA. You may have already seen this, but if you select Total Amount, on the screen, Allocating Capital Gain or Loss is where you enter the applicable allocation amounts.
The other option as you noted is Sale by Sale. If you select Sale by Sale, you will not see a screen where you are specifically asked to enter your allocation amounts but rather, you will see the screen, Capital Gain and Loss Summary. It is here where you can Edit the listed entries to allocate gain/loss to CA sources.
Ordinarily, when taxpayers are provided with two--legitimate--ways of computing the tax, the standard reply is to select the option with the best tax outcome. However, in your situation, the issue you are addressing has to do with allocation of gain/loss to CA. Whichever option you choose, Sale by Sale or Total Amount, the result should be the same. In other words, with either option you are taking your gain and allocating it to CA for the period of time you were a resident versus the time you were a non-resident. From a tax perspective, the result should be the same.
What are the differences you are seeing, and can you tell the reason why you are seeing different tax outcomes? Follow-up with any additional information you feel may be helpful.
Dear George M777,
Thank you for your answers to my questions. I do think that Turbo Tax could be improved upon in this area as it was not clear to me what the differences were between "Sale by Sale" and "Total Amount" nor was I clear what these terms actually meant. Also when I clicked on "Sale by Sale" it was not obvious to me that I had to continue on editing in the Capital Gains Summary area. This will determine if the capital gains amount is carried over to column E which is very important and will have an effect on the amount of tax you owe. Thanks again,
Cindy2
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