Unearned Income

[kwthetaxguy]

To whom it may concern: 

I have a client who is domiciled in California (home, license, voter registration, etc.); however, they lived with their parents in Delaware for a large majority of 2020 due to the covid pandemic. My client had no earned income and typically lives off of gifts from their parents. The client had a house in the Dominican Republic that they owned 50/50 but sold the home last summer. This created a significant gain for my client, but this is my conundrum, if the client had no earned income, do they report the gain only in CA where they are domiciled or do they also report the income in DE?

[ljsmith2]

Since client owns a home in California and was simply out of state due to COVID, 'temporary absence' it sounds like client will be returning to California at some point. I would report it to California as a full year resident.   Here is Calif Pub 1031 guidelines for determining resident status that should help.  See page 4 defining resident, and page 6 income taxable by California.

https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf