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Taxpayer Moves from Texas to California on March 1 and becomes Calif Resident

jimgsabbatini
Level 3

My question is non passive Rental losses:

I apportioned the interest and dividends between California and Texas that were received before and after March 1.

He had business income in California of $462,000

He had non passive rental losses from Illinois (Real Estate Professional with material participation) of ($435,000) from 2 Illinois K-1. In Lacerte I want to claim the losses For California to offset his income and I want to file Illinois returns so that I can use the losses against  eventual sales of the rental property.

To get an Illinois return I sourced the rental loss to Illinois but  then Lacerte adds back the losses to  California income.

I know California taxes worldwide income, so I assume they would allow losses from other states, but I can't record the losses on both the California return and Illinois return.

Does California Allow losses that are sourced to another state ?  They sure would tax the income. I have not found the trick to do this in Lacerte.

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jimgsabbatini
Level 3

Here is the dilemma the only way to claim the loss for California is to source it to California in Lacerte. 

However eventually the real property will be sold so I want to file a return for Illinois reporting the loss.

What if I want to use an Illinois Net Loss Deduction (NLD) but failed to file the loss year return?

You must file the return that generates the loss prior to claiming the loss. The return that generates the loss can be filed at any time for purposes of establishing the loss, but no credit or refund will be issued on a return that is filed three (3) or more years past the extended due date. If you file your loss return three (3) years or more past the extended due date of the return, you will be entitled to claim the loss for NLD purposes, but you will not be entitled to a refund or credit of any overpayment calculated on the loss return. 

Do I have do a separate REP and just file an Ilinois return ?

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