Incentive Stock Options exercised in California on Feb 1. Moved to Maryland on June 16. Sold the stock on Dec 10. Which state do I report the capital gain/loss?

[jimbojones · Accepted solution]

Found this for other folks:

FTB Pub 1004 page 11 - https://www.ftb.ca.gov/forms/misc/1004.pdf

If you exercise an incentive stock option while a California resident or a nonresident and dispose of the stock in a disqualifying disposition while a nonresident, the transaction is treated as if you exercised a nonstatutory stock option. The difference between the option price and the fair market value on the exercise date is wages. (Sun Microsystems, Inc., 69 TCM 1884 (1995)) The income source is where you performed services between the grant date and the exercise date. No AMT adjustment is required if you dispose of the stock in the same year you exercise the option. However, if the stock is disposed of in a later year, then an AMT adjustment must be made in the year you exercised your incentive stock option. The AMT adjustment source is determined in the same manner as income from the exercise of a nonstatutory stock option for regular tax purposes.  

Make sure you read example 7, since it covers sale price < exercise price.  This impacts your capital gain and compensation.