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yofu1
Level 2

How to determine what is California sourced income on the capital gains

 
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Accepted Solutions
DawnC
Expert Alumni

How to determine what is California sourced income on the capital gains

The gains are allocated to the state you resided in when the property was sold and the gain or loss was generated.     Allocating unearned income (capital gains) is pretty straightforward: just allocate it to the state you were a resident of when you received it.  Here are some examples, the 2nd one refers to capital gains:

  • You received three quarterly dividend payments while living in Arkansas, and the remaining dividend while living in Oklahoma. Allocate the first three payments to Arkansas and the last payment to Oklahoma.
  • You sold some stocks right after you moved to Iowa.  Allocate the gain to Iowa.
  • You closed an interest-bearing account while still living in California, so you'd allocate 100% of the interest to California.
    • On the other hand, if the account remains open, you'd allocate the interest you earned as California resident to California, and the remainder to your new state. An easy allocation method is to divide the year's interest by 12, and then multiply the figure by the number of months you lived in each state.

How do I allocate (split) income for a part-year state return?

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2 Replies
DawnC
Expert Alumni

How to determine what is California sourced income on the capital gains

The gains are allocated to the state you resided in when the property was sold and the gain or loss was generated.     Allocating unearned income (capital gains) is pretty straightforward: just allocate it to the state you were a resident of when you received it.  Here are some examples, the 2nd one refers to capital gains:

  • You received three quarterly dividend payments while living in Arkansas, and the remaining dividend while living in Oklahoma. Allocate the first three payments to Arkansas and the last payment to Oklahoma.
  • You sold some stocks right after you moved to Iowa.  Allocate the gain to Iowa.
  • You closed an interest-bearing account while still living in California, so you'd allocate 100% of the interest to California.
    • On the other hand, if the account remains open, you'd allocate the interest you earned as California resident to California, and the remainder to your new state. An easy allocation method is to divide the year's interest by 12, and then multiply the figure by the number of months you lived in each state.

How do I allocate (split) income for a part-year state return?

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

Mike9241
Level 15

How to determine what is California sourced income on the capital gains

however, the sale of tangible capital assets like real estate can be taxed by both the state where the property exists and the state where you have domicile if different.  if the property is not located in the state where you have domicile but has an income tax, there will be a tax credit for the gain taxed by both states. 

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