capital loss from my federal return when filing 2 state returns

Forum|Forum|2 years ago
February 14, 2024
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I have a capital loss on my federal return and am filing 2 state returns. How much and which state should should I file under?

Thanks

DianeW777

It depends on whether you moved during the year.

The capital loss should be filed with the state where it occurred. If you moved during the year, first determine the month or months of the capital investment activity (gains/loss) occurrence during each period of residency. Report on each state return the activity that occurred in that state. The end result when adding both states capital gain/loss together should equal the total overall loss in the current year. It is a record keeping necessity when dealing with capital transactions.

If it is a capital loss carryover, then split it based on months of residency in each state. Please update here if you have more questions or need additional assistance.

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jean1918Author

When we lived in AZ, We sold investment property at a loss in NC. Eventually we move to NC. So I am filing returns in both states. So I claim the loss in AZ. Now federal return only lets me take a partial loss. What about AZ. Can I claim claim half in each state. And for next year do I then take a carry over on federal and state too.

Thank you

mglauner

If you sold investment property located in North Carolina, you should report the sale there, as a Part-Year Resident, since you say you moved back there during 2023. As you mentioned, you will end up claiming a portion of the loss in each state, based on amount of time you lived in each.

Here's more info on Allocating Income for a Part-Year Resident.

@jean1918