I live in UT and Sold my NC non-rental vacation home . How do I handle the Gain

[guythatwalksthehill]

I'm a full time resident of UT and sold my non-rental vacation home in NC. that i've owned for many years.  I had a capital gain on the sale, but on my schedule D , I have a "net" capital gain of "0" because of a Long Term Capital Loss Carryover.  The rest of my income is subject to tax in UT.  If I plug into TurboTax the'0" under capital gain for NC, it assigned all the taxes owed to UTAH.  If I plug in the Part of the Capital Gain Before the LongTerm loss offset into the NC return, it assigns Taxes owed to NC, the deducts them from what I owe in UT?  Not sure which one is correct?   I also question, if I could really deduct the Taxes paid to NC on my UT return since what generated the taxes was Zero'd out on my Schedule D?  Any help would be appreciated

[MaryK4]

You will have to report the capital gain income on the North Carolina property to North Carolina and pay the state tax to North Carolina.

You are correct that you cannot claim the credit for the taxes paid to North Carolina on your Utah tax return because Utah allows the capital loss carryforward, so the gain on the NC property is not taxable income on the Utah return.

In the North Carolina section of TurboTax, on the Nonresident Income Allocations page, you do enter the NC income as the gain which does trigger the tax owed.

On the Utah return, in the credit for taxes paid to another state, select North Carolina from the dropdown, then on the Other State Information page, enter 0 for double taxed income and 0 for Tax Paid to 0 on Double-Taxed Income.  (see below)

[guythatwalksthehill]

So if I understand correctly, NC doesn't recognize the LongTerm Carryover? So put the full amount of Capital Gain in the Non-Resident portion of NC, then put 0 for the tax paid to another state in the UT section, so Pay the Capital Gain to NC and don't deduct the amount paid to UT?

[MaryK4 · Accepted solution]

Correct, the only reason you have a gain in North Carolina is because they do not allow the loss.  Because Utah does allow the loss, you do not pay tax on the gain.  The credit for taxes paid to another state only applies to income that is double-taxed.  @guythatwalksthehill