Which state to report interest income on land contract sale

The new state you moved to.  

Allocating unearned income (capital gains and interest) is pretty straightforward: just allocate it to the state you were a resident of when you received it. Here are some examples:

• You received three quarterly dividend payments while living in Arkansas, and the remaining dividend while living in Oklahoma. Allocate the first three payments to Arkansas and the last payment to Oklahoma.
• You sold some stocks right after you moved to Iowa. Allocate the gain to Iowa.
• You closed an interest-bearing account while still living in California, so you'd allocate 100% of the interest to California.
  • On the other hand, if the account remains open, you'd allocate the interest you earned as California resident to California, and the remainder to your new state. An easy allocation method is to divide the year's interest by 12, and then multiply the figure by the number of months you lived in each state.