creubank[at]yahoo.com wrote:

- quote -

You prepare your nonresident CA tax return to calculate your
actual tax liability. You then prepare your CO tax return
where you will be taxed on any capital gain (CO only allows
an adjustment for Capital Gains on CO property). CO will
allow a credit (Use CO Form 104CR) for your actual CA tax
liability, not the amount withheld. The credit will be the
lesser of what CO or CA is taxing you on the gain. You are
required to attach a copy of the CA tax return to your CO
return.

--
Alan
http://taxtopics.net

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I sold my investment property in California this year with
significant capital gains. California state law requires
the withholding of 3 1/3% of the sales price (not gains) of
the property at the time of the sale. I do not qualify for
any of the exceptions from the withholding.

I moved out of California many years ago, and am living in
Colordao today. I understand that I am required to file a
California state tax for 2005 to report the capital gains
from the sale of my property (and, presumably, get some of
the state taxes back, since they did not adjust for the
basis).

I will also owe federal taxes on the capital gains.

My question is: when I file my Colorado state tax return
next year, will I also be liable for Colorado capital gains
on the sale of my California house? How does this work? Do
I get a tax credit for the California tax I paid, and if so
is this (1) the 3 1/3% that was paid upfront, or (2) the net
tax I will have had paid by April 15, 2006 after the
California Franchise Tax Board has refunded part of my tax
payment.

If (2), then there is a timing problem because I won't have
the net tax paid until 2006.

Curtis Eubanks

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