North Carolina partial year: TT is deducting more than $3k of stock losses from normal income

[dripstone]

I moved to North Carolina on July 1. After moving I earned $124k of self-employment income and also realized $57k of net stock losses.

My partial year return is showing my NC income as $124k minus $57k = only $67k

There's no way (I don't think) that North Carolina will allow me to deduct that entire stock loss, yet TT is saying the return is 100% accurate.

Should I fix this somehow? Or should I just submit it and wait for NC to tell me I owe them more?

[MaryK4]

@dripstone Can you clarify how you are able to show $57,000 in stock losses?  Capital losses are limited to $3,000.  

[dripstone]

Yes, while doing the federal part, I imported my info from Fidelity which showed $180k of net gains.

In first half of year, I lived in New Jersey, and realized $237k of net gains.

In second half, I lived in North Carolina and realized ($57k) of net losses.

While doing the North Carolina step-by-step return, I came to a page titled "Part-Year Resident Income Allocations" with a box for me to allocate how much of my total $180k net gains was realized in North Carolina, and I inputted negative -$57,000 in that box.

Maybe I should change that to negative $3,000 even though that's technically not the correct amount. If I do that, will it prevent me from carrying forward the other $54,000 of losses in future on my NC return?

Thanks for any insight you can give.

[dripstone]

Yes, while doing the step-by-step for my North Carolina return, on a page called "Part-Year Resident Income Allocations" TT asked how much of my total capital gains for the year occurred while I was a North Carolina resident, and I entered negative ($57,000) because that's how much it was. There were no instructions to limit that to only ($3,000) or whatever North Carolina's limit might be.

The yearly info was automatically pulled in from my Fidelity account. But it was not allocated automatically, so I had to enter New Jersey and North Carolina manually.

Should I just say it was $3,000 of losses? Would that impair my ability to carry forward the unused capital losses into future years' NC returns?

Thank you.

[MaryK4]

Thank you, your entries make sense.  Yes, North Carolina uses the federal amounts so you would have to adjust the loss to the $3,000 limit.  You will still get the capital loss carryover, because it will be included on your federal return next year so any losses you can take will be reflected on your Resident tax return next year.  @dripstone 

[dripstone]

I had a net gain for the year, so I won't have any federal loss carryover. In other words I realized more cap gains in the first half of the year (before I moved) than the losses I realized after moving.