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Capital Loss Carryover for Part-Year Resident

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April 3, 2024
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In my 2023 Federal return, I have a capital loss carryover of over $3,000. In 2023, I moved from WA state to NY, and then from NY to CA. As such, I was a part-year resident in both NY and CA. When calculating my capital loss carryover for my NY and CA state return, should I use the $3,000 amount?

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Best answer by AmyC

No. Neither state allows a capital loss that is not related to income from that state.

From the CA instructions:

Line 7 – Capital Gain or (Loss)

Generally, no adjustments are made on this line. California taxes long and short term capital gains as regular income. No special rate for long term capital gains exists. However, the California basis of the assets listed (within this line instructions) may be different from the federal basis due to differences between California and federal laws.

From the NY instructions:

New York State amount column

Enter your New York capital gain or loss as a nonresident. To compute this amount, use a copy of federal Schedule D (Form 1040) as a worksheet, and the federal provisions for computing capital gains and losses only for transactions that were from New York sources.

On a side note, I find it hard to believe that you were a part-year resident all 3 places. The hassle of changing driver's license, voting, settling in and establishing a home seems difficult. Here are some things states look at when determining residency from The Tax Book:

Registering to vote and voting in the new state.
Purchasing residential property.
Titling and registering vehicles.
Paying state income tax to another state
Notifying the state of previous legal residence/domicile of the change in state of legal residence/domicile.
Preparing a last will and testament which indicates the new state of legal residence/domicile

AmyCAnswer

Employee

No. Neither state allows a capital loss that is not related to income from that state.

From the CA instructions:

Line 7 – Capital Gain or (Loss)

Generally, no adjustments are made on this line. California taxes long and short term capital gains as regular income. No special rate for long term capital gains exists. However, the California basis of the assets listed (within this line instructions) may be different from the federal basis due to differences between California and federal laws.

From the NY instructions:

New York State amount column

Enter your New York capital gain or loss as a nonresident. To compute this amount, use a copy of federal Schedule D (Form 1040) as a worksheet, and the federal provisions for computing capital gains and losses only for transactions that were from New York sources.

On a side note, I find it hard to believe that you were a part-year resident all 3 places. The hassle of changing driver's license, voting, settling in and establishing a home seems difficult. Here are some things states look at when determining residency from The Tax Book:

Registering to vote and voting in the new state.
Purchasing residential property.
Titling and registering vehicles.
Paying state income tax to another state
Notifying the state of previous legal residence/domicile of the change in state of legal residence/domicile.
Preparing a last will and testament which indicates the new state of legal residence/domicile

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V

vtg2020Author

Thanks for the info. With regards to determining residency in 3 states in 1 year: my employer has already withheld state taxes for all 3 states (zero for WA) in 2023. Does the withholding alone mean that I must be a part-year resident in all states, or do the criteria / judgment calls you mention above still apply?

AmyC

Employee

Anybody can work in a state for a while as a nonresident, which is what it sounds like may be the case for you. A nonresident return would be correct instead of a part-year. When you file taxes, your resident state taxes all income earned but gives credit for tax paid to other states.

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T

Tfeldman221

If you move into NYS in 2023 with an accumulated capital loss carryover from your 2022 tax return, which arose in the years that you resided in California, can you use that capital loss carryover to offset 2023 capital gains on your 2023 NYS tax return?