- quote -

See some of the other replies. The loss is a Nevada loss
but it will affect their CA tax bracket rate. The CA tax
rate is based on the "what if I was a resident of CA all
year" methodology.

Alan
http://taxtopics.net

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joseguerra[at]mailtag.com says...

- quote -

Because you have already moved to Nevada it's too late for
you to do any California tax "planning". Any capital
gains/losses you realize as a Nevada resident are subject to
Nevada taxation at the tremendous rate of 0%.

Gary

--
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derive my email address X.

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- quote -

My concern is that California doesn't have a long-term
capital gains rate. Capital gains (long or short term) are
taxed at the same rate as other income. If, indeed,
intangible capital losses can be applied to offset real
property capital gains, that is a good thing. I've paid
more than enough taxes to California already, and welcome
the opportunity to reduce my last contribution as much as
possible.

Thanks for your reply.

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- quote -

I agree. Unless the trade date for the mutual fund transaction, for CA
purposes, is prior to the change of residency, the losses could not be used on
the CA 540NR. It would still be worth doing for federal purposes

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- quote -

I disagree. The transaction reduces taxable income for
California purposes, but not taxable California income.

As I wrote in the opus which apparently didn't make it
to Dick, to calculate CA non-resident taxes, you need
to calculate taxable income for California purposes
(if taxpayer is a US person, essentially Federal taxable
income disregarding personal exemptions) -- call it X;
and income which either either CA sourced or attributed
to times when a CA resident -- call it Y.

You then calculate the CA tax on X, and multiply by Y/X.

The proposed transaction reduces X, but not Y.

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- quote -

I don't think this is correct. I sense from the post, that these
people have already moved to Nevada and they are asking if they
take the loss before year-end will it offfset the CA gain on
their home. If this is the case, then the loss is sourced to the
state in which they reside, Nevada. When they complete their CA
part-year resident returns they will find that their CA taxable
income will not include the $100,000 loss. On the other hand,
their effective CA tax rate will be based on a computation that
included the loss, as CA uses a method that bases the rate on a
"what-if I was a resident all year" approach.

Alan
http://taxtopics.net

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- quote -

Helen,

They are no longer CA residents. Unless they have CA sourced
losses, losses from portfolio income after they move to
Nevada will not affect their CA tax.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.

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Jose Guerra wrote:

- quote -

There are two concepts here. On California non-resident
returns, you calculate both CA-source income (which you
can't offset in this manner, unless the rollover was made
while a CA resident), and total income for CA purposes
(which is offset). You then calculate the CA tax on the
total income and multiply by the ratio (which may be greater
than 1, in your case.)

So the action you describe doesn't reduce your CA income,
but does reduce your CA tax.

--
This account is subject to a persistent MS Blaster and SWEN
attack. I think I've got the problem resolved, but, if you
E-mail me and it bounces, a second try might work. However,
please reply in newsgroup.

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Isn't there a question about the timing of the two sales?
One obviously made while still a CA resident; the other is
being debated and it seems to be after moving out of the state.

Nan, EA in LA

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- quote -

Sure. And remember, you will owe federal income tax on the
$100K too, unless you use the losses.

Helen, EA in PA
Member of The Tax Gang
President, PA Society of Enrolled Agents
Campaigning for NAEA Board of Directors - Looking for YOUR vote

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My wife and I sold our house in California and our profit is
about $600K. We have legitimately moved to Nevada.

Question: Can we offset the $100K that would be subject to
California income tax by taking a mutual fund losses of
$100K. The idea would be to rollover losing mutual funds
into equivalent mutual funds. Should those new mutual funds
eventually show a profit, presumably they could be sold next
year (holding for over a year), and then ONLY be subject to
federal capital gains tax.

Is this a legitimate way to avoid paying California taxes on
the $100K?

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