Part Year MICHIGAN resident. How to adjust MI CAP gains. Not all stock sales reported in federal are copied to STATE.

Forum|Forum|4 years ago
March 5, 2022
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We have moved out of MICHIGAN in July. Having 100 stock sale reported in FEDERAL. 90% stock sales are done towards end of the year and CAPITAL GAINS/LOSSES need to be removed from MICHIGAN state returns.

While preparing MICHIGAN retruns, Michican Captial gains section has Only one page copied from Short term and one page for longterm. Not everything reported in FEDERAL is available to adjust Capital Gains and Losses.

How to add missing entries from federal into MICHIGAN state return to adjust CAPITAL GAINS.

JillS56

To make adjustments for the Michigan portion of your income, when you start your Michigan return and your state that you were a part-year resident and then you will be asked the dates you resided in Michigan. It would be from 1/1/2021 through the date you moved out of state. When you get to the screen that says Your 2021 Michigan taxes are ready for us to check and there is a list of the sections of the return. Click on Income and there will be a screen for each area of income on your Federal return where you designate the amount that goes to Michigan residency. When you get to the question about Capital Gains and Losses enter the amount attributable to Michigan. You will have to total of the sales from your 1099-B the amount that is attributable to the period that you were a resident of Michigan.

Entering the amounts through the procedure above should avoid you have to make any adjustments. In Michigan you would only enter totals you would not enter individual transactions.

The instructions for Michigan 1040 Schedule 1 - Adjustments to Capital Gains and Losses is on Line 3 of Schedule 1. According to the below instructions, this would only be used for three reasons and your situation would not be one of those reasons.

Line 3: Use Michigan Adjustments of Capital Gains and Losses (MI-1040D) and related Michigan Sales and Other Dispositions of Capital Assets (MI-8949) only if you have capital gains or losses attributable to: (1) an election to use Section 271 treatment for property acquired before October 1, 1967; (2) the sale or exchange of U.S. obligations which cannot be taxed by Michigan; or (3) the sale or exchange of property located in other states. If you reported gains on U.S. Form 4797 on property acquired before October 1, 1967, or located in other states, adjust the gain on the Michigan Adjustments of Gains and Losses From Sales of Business Property (MI‑4797). Enter gains from the Michigan column of MI-1040D, line 12, and MI-4797, line 18b(2). Instructions are with each form.

This article from Michigan.gov When Adjustment on Michigan Capital/Gain Loss is Necessary explains when you need to adjust.

However, if you enter the capital gains/losses as stated above through the designation process of the state return, you would not need to make an adjustment.

bmprakashAuthor

Hello Jill,

Thank you for your feedback.

I did followed exact steps as said by entering dates of residency.

In Michigan Capital Gains and Losses section, message as below is displayed

On your federal return, you reported .... review each of your sales and enter the correct Michigan gain or loss.

After clicking YES, it brought me "Sale of Short-Term Capital Assets Summary". In this section, i only see 67 entries out of 100+. I have fewer Long-term entries only. Not everything is coming to adjust.

Other subsections like Dividents, rents etc can be adjusted fine. Only problem is with short term and longterm capital gains from sale of stock.

I even tried to put only a month of michigan residency, to see if number of CAPITAL GAIN entries copied over reduced...It still did not work. I am getting exact same number of line item copied over irrespective of DATES of RESIDENCY entered in state section.

I have also reviewed FEDERAL capital gains section for the missing entries, everything in DATE OF SOLD section is matching with what i have in my 1099-B form.

I have also tried starting over state multiple times, still same problem persist.

How to resolve this error in copy over of capital gain entries into STATE section?

Thanks & Regards,