For Arizona State return , how is the apital Gain or Loss from Assets Acquired After December 31, 2011 calculated ?

[senorrollover]

how are they calculating capital Gain or Loss from Assets Acquired After December 31, 2011 for an Arizona State return ?

[JohnW152 · Accepted solution]

For Arizona state tax purposes, you're allowed to subtract 25% of any net long-term capital gain that's been included in your federal adjusted gross income when it was derived from an investment in an asset acquired after December 31, 2011.

Please see Lines 19 through 23 - Net Capital Gain or (Loss) in the 2020 Arizona Resident Personal Income Tax Booklet available at Form 140 - Arizona Resident Personal Income Tax Booklet for more information.

[joelserrano]

capital gain on primary residence purchase in 1999 thwen converted to rental in 2012.......would this be an asset acquired after dec 31 2011?

[AmyC]

No. The house was in your name, purchased before 2012.

@joelserrano

[suzannepat]

In reference to AZ 25% reduction of LTCG.

Line 8b on Schedule  D shows a long-term capital gain o $32,908. However, after deductions from long-term capital loss on Schedule D line 14, my Net long-term capital on line 15 shows a loss.

Do I report on my AZ return the amount on Schedule D line 8b (equals the amount on my brokerage statement of long-term capital gain for gains after December 32, 2011) or the amount on line 15?

Where do Capital gain distributions, Schedule D line 13, fit into this picture?

[suzannepat]

n reference to AZ 25% reduction of LTCG.

Line 8b on Schedule D shows a long-term capital gain o $32,908. However, after deductions from long-term capital loss on Schedule D line 14, my Net long-term capital on line 15 shows a loss.

Do I report on my AZ return the amount on Schedule D line 8b (equals the amount on my brokerage statement of long-term capital gain for gains after December 32, 2011) or the amount on line 15?

Where do Capital gain distributions, Schedule D line 13, fit into this picture?

[MaryK4]

You will want to use the Line 15 amount, and if you have a zero gain or a loss, you cannot take the deduction.  The Line 13 Capital Gain distributions can be used to determine your net capital gain/loss.

Arizona provides a reduction of 25% of the net Long-Term Capital Gains received from assets acquired after 12/31/2011 and included in the Federal Adjusted Gross Income (AGI).  Beginning in 2013, a subtraction is allowed for a percentage of any net long-term capital gain included in your federal adjusted gross income that is derived from an investment in an asset acquired after December 31, 2011.

[DiddlyD]

No, your basis in the property is determined on when you actually purchased the property not when you converted it to a rental.  You lose the exclusion of primary residence when you exceeded the occupancy rule that says you can take the exclusion of capital gains if you live in it 3 of the last 5 years prior to the sale.  If you didn't meet this standard, you have to pay capital gains on the increased value and recapture of depreciation etc. 

[DiddlyD]

This is whole issue revolves around the "Date of Purchase" which has to be after 12/31/2011 to received the reduced capital gains tax, not when sold or converted etc. etc.   I had sold a rental property in 2022, but TT hiccuped and didn't import the previous year TT information on that property and I had to manually add it back in to report the sale and capital gains.  Somehow TT calculated the AZ credit I was not entitled to even though I entered the correct purchase date back in 1987, so I had to go into the Federal form and change the date to remove the credit I was not entitled too.  

[DiddlyD]

Additionally, if after completely the capital gains worksheet, if the outcome is you don't have any capital gains or negative (loss), you are not entitled to get this 25% reduction in capital gains.  I do recommend you review your tax return and make sure TT did not entered the credit in error as it did mine.