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Discussion:CA NOL carryover for nonresidents

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Discussion Forum Index --> Advanced Tax Questions --> CA NOL carryover for nonresidents

Discussion Forum Index --> Tax Questions --> CA NOL carryover for nonresidents

NoVATaxes (talk|edits) said:

5 October 2010
Client is California nonresident. For 2007 & 2008, had CA NOL due to rental loss. Upon disposition of the rental properties in 2009, client still has some NOL carryover from 2008. After disposing of the properties, she no longer has any CA sourced income. Do I continue to file her nonresident return to carry over the NOL from 2008, in case within the next 8 years she has CA income again? Or since she no longer has CA sourced income, there's no need for a return, and I just have her keep the latest copy of 3805V for the remaining C/O period?

As an aside, I'm very surprised California would allow an NOL for nonresidents when there's no federal NOL. (Please don't let me get that wrong.)

KatieJ (talk|edits) said:

6 October 2010
Well, we used to have some arguments about that, but since 2002 it is clear that a nonresident's California NOL equals the NOL arising in years when the taxpayer was a resident, plus the NOL arising in nonresident years from California sources. The California NOL deduction is no longer tied to the federal or total NOL deduction in the same year. See CRTC Sec. 17041(i)(2), added by AB 1115, Ch. 920, Stats. 2001, effective for years beginning after 2001. It's only fair!

No need to file nonresident returns if there is no CA source income. The NOL will hang out there until there is California source income to absorb it or it expires.

NoVATaxes (talk|edits) said:

7 October 2010
Thank you, Katie. I was hoping you would chime in.

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