HI long-term gain on rental property not offset by losses?

[bptsj]

Hello All,

I used TT to file my Federal & State (CA) taxes as well as my non-resident HI taxes.

I filed in HI because I sold a rental property for a long-term gain. In addition to the rental in HI, I had other long-term losses on my Fed return. TT reported the net gain on the Hi long-term gain worksheet. TT did not generate a HI D-1 form for long-term gain/losses.

The HI tax board selected me for audit and said I need to fill out their D-1 form as well and send them copies of my tax filings for two years and copies of receipts. The D-1 form does not look at my losses outside of Hawaii. They want to tax only the HI gain. Is this correct? My other losses do not offset my gain? The HI Tax board has not responded to my three phone messages or letter.

Thanks,

Brian

[MaryK4 · Accepted solution]

Yes, the Hawaii D-1 is analogous to the IRS 4797 so it will only look at your Hawaii sale.  You should be able to get the federal 4797 from your TurboTax records and use it to complete the information for Hawaii.  If a D-1 was not filed, Hawaii is mostly looking to see that the 1250 and other related information.  Post again if you have any additional questions.