Can filing two state returns handle a non-resident property sale that resulted in a capital loss on my fed return?

[JBG]

The land sale was in a non-resident state. I will need to file two state tax returns. I need to show there was no capital gain on the sale so I will not be taxed on it. I do not want to buy an additional state return if Turbotax software cannot differentiate the specific land sale and total capital gains loss.   

[AnnetteB]

What is the non-resident state where the sale took place?

[JBG]

North Carolina, thanks.

[AnnetteB · Accepted solution]

When you are completing a non-resident tax return, TurboTax will ask you to allocate your income items from the Federal return to the non-resident state return.  Unless your income item is reported on a state-specific tax form (like a W-2 that has state information included), you will need to do the calculation and allocation manually based on your knowledge of your income for the year. 

If you have other capital gains and losses reported on your Federal return in addition to the land sale, you will need to know the overall capital loss due to the land sale in NC.  Then, as you go through the NC return, the total Federal capital gain/loss amount will be shown and you will enter the amount due to the land sale to allocate it to NC. 

Since your NC income results in an overall loss, there should be no taxes.  The return should still be filed since you did receive income from a NC source. 

You will also need to pay close attention to your resident state return to be sure that no adjustments need to be made to remove the loss from that state return since it is attributed to another state. 

[JBG]

Thank you for your detailed response. The land sale actually had a capital gain (reported via a 1099-S) but I had other losses that made the end result a capital loss for the tax return. So, I had a NC gain but overall a loss when including the sales. I will make sure I include that information as well, even though the losses were securities sales reported via 1099-B. Am I still correct that no taxes are owed to NC? Thank you.

[AnnetteB]

Not necessarily.  Based on reading your question I was under the impression that the NC sale on its own resulted in a loss, not a gain.  You would only report that sale on your NC return, therefore it will be shown as a gain.  Depending on how much of a gain it is, you may or may not owe taxes to NC.  I'm sorry for the confusion.

[JBG]

The confusion was due to my inexactness. I appreciate your response and I will follow up on it. Thanks again.