Schedule K-1 : Income Should Be Excluded If Distribution of Income Occurred After I Moved Out Of California

[upnguyen5]

I have a Schedule K-1 which has income and dividends. I moved out of California in April 1, 2021.  Should I include all of the income and dividends in my Schedule K-1 in California's Form 565 (Partnership Return of Income)? Or should I only include the FULL income and dividends if it was distributed during the time of when I lived in California?

[Mike9241]

if it is a CA based business then you're taxed on the income for the whole year. if not, then you're taxed on the income earned while you were a resident despite when it was distributed.

[upnguyen5]

Thanks Mike9241 for the response. 

The income is from Fidelity - unsure if I should categorize this as a CA base company given its headquarter is in MA?

Can you clarify the difference between "earned" and "distribution" with an example of a dividend income in a K-1? I am trying to understand your statement "then you're taxed on the income earned while you were a resident despite when it was distributed".  

[upnguyen5]

Thanks Mike9241 for the response. 

The income is from Fidelity - unsure if I should categorize this as a CA base company given its headquarter is in MA?

Can you clarify the difference between "earned" and "distribution" with an example of a dividend income in a K-1? I am trying to understand your statement "then you're taxed on the income earned while you were a resident despite when it was distributed".  An example will help me understand what you are trying to state.

[RobertB4444]

@upnguyen5  @Mike9241 is asking about YOUR business.  You stated that you needed to file a California Form 565 (Partnership Return of Income).  

If your partnership is a California based business and you have to file a partnership return in California then you have to include all of the income that that partnership earned over the course of the year no matter where it earned it.  

[upnguyen5]

In the K-1, the partnership address is in Texas. Income is not from a CA source.  I used to live in CA for 3 months in 2021.  I then moved to Texas.  In Form 565 (schedule K-1 worksheet, partnerships),  under the field "California Amount", I believe I should not enter any value for ordinary income?  But in the field "Amount from Federal Schedule K-1", I should leave the income as is ($100)?

[PatriciaV]

To determine the California amount, you will need to allocate the income from Schedule K-1 based on the number of days you were a California resident. The Amount from Federal Schedule K-1 would be the actual total from the K-1.

From FTB Pub. 1100:

The allocation of income between the period of residency and the period of nonresidency must be made in a manner that reflects the actual date of realization. In the absence of information that reflects the actual date of realization, you must allocate an annual amount on a proportional basis between the two periods, using a daily pro rata method.