1040 - two states question

Forum|Forum|2 years ago
April 10, 2024
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You live in CA and own an SFR rental property in OK, reported on your 1040 Schedule E.

After all income and expenses, depreciation, etc., the SFR has a net $1,000 positive [passive] profit for the year.

Its Schedule E carries forward a -$1,500 [passive] loss from previous year due to big repairs. This effectively cancels the $1,000 passive profit and you owe no tax on it.

TT recognizes the situation, and creates a Schedule S. Then it asks you "how much of your RE income is from OK", apparently to avoid double taxation.

Question: do you enter the actual OK passive income ($1,000), or do you enter $0 since that income is effectively not taxable due to loss carryovers?

Best answer by DavidD66

You would enter $0 - the amount of net rental income on your federal tax return that was sourced in Oklahoma. If the loss had been from a different rental in another state you would enter $1,000. But based on the information in your question, the prior year loss is also form OK, so enter zero.

DavidD66Answer

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aysorefAuthor

@DavidD66 thanks for the advice. So if I understand clearly, "... $0 - the amount of net rental income..."

In this context the TT question about "net rental income" is actually the net *taxable* income, after the effect of previous losses, if any - correct?

Also - in this case, should TT state return for OK also show a "net rental income" of $0 ?