No withholding for CA was probably the result of the invoking IRC 121 on the FTB 593 form.

A piece of CA real estate was sold, so a 540NR should have been filed. Failure to do so tends to make CA rather upset and file what the "think" the taxpayer owes in the form of a Notice of Proposed Assessment (NPA.) It is seldom a correct figure and as the name implies it is a "proposed" figure. FILE THE 540NR

1) IRC 121 only (assuming qualified)

2) Residency of NC has nothing to do with it. The real estate was CA. The depreciation was CA. CA wants a tax return. Any capital gain is CA capital gain. Any depreciation recapture is CA depreciation recapture. 

3) 540NR is a really neat tool to figure out what percentage of the income is CA source and how to allocate the tax based upon that. Do the 540NR and see what happens.