Discussion:California Involuntary Conversion
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
(Difference between revisions)
| Revision as of 20:28, 5 November 2009 DaveFogel (Talk | contribs) (CA conforms to I) ← Previous diff |
Current revision KatieJ (Talk | contribs) (Echoing Dave --) |
||
| Line 5: | Line 5: | ||
| {{ForumReplyPost|UserID=DaveFogel|Date=5 November 2009|Text=CA conforms to IRC §1033. See §18031 of the Calif. Revenue and Taxation Code. As a result, I don't think that it matters whether the replacement property is in CA or elsewhere. However, for CA purposes, since the gain is deferred, not eliminated, the taxpayer will have to report the gain to CA in a future year when the OR property is disposed of in a taxable transaction.}} | {{ForumReplyPost|UserID=DaveFogel|Date=5 November 2009|Text=CA conforms to IRC §1033. See §18031 of the Calif. Revenue and Taxation Code. As a result, I don't think that it matters whether the replacement property is in CA or elsewhere. However, for CA purposes, since the gain is deferred, not eliminated, the taxpayer will have to report the gain to CA in a future year when the OR property is disposed of in a taxable transaction.}} | ||
| + | |||
| + | {{ForumReplyPost|UserID=KatieJ|Date=5 November 2009|Text=Echoing Dave -- it doesn't matter where the replacement property is located. If the taxpayer is a California resident when the replacement property is sold, all of the gain will be subject to California tax. If the taxpayer is a nonresident when he sells the Oregon property, the gain will be California source income to the extent of the difference between the fair market value of the property at the date of the exchange and his basis in the property. | ||
| + | |||
| + | See, e.g., the FTB Residency & Sourcing Technical Manual, Sec. 3340, p. 16 (http://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/3000.pdf). The example here is a 1031 exchange, but the same principles would apply to a 1033.}} | ||
Current revision
Discussion Forum Index --> Basic Tax Questions --> California Involuntary Conversion
Discussion Forum Index --> Tax Questions --> California Involuntary Conversion
| 5 November 2009 | |
| Client's property was condemned by a CA state agency. Client wishes to defer gain on the proceeds. The question is, for CA tax purposes, does CA have any problem with the replacement property being outside of CA? The client has found replacement property in OR that he would like to purchase. I know it's ok for Federal, and CA is supposed to mirror Federal law regarding involuntary conversions, but I want to make sure CA is not going to have problems with my client buying replacement property out of state. Thanks! | |
| 5 November 2009 | |
| CA conforms to IRC §1033. See §18031 of the Calif. Revenue and Taxation Code. As a result, I don't think that it matters whether the replacement property is in CA or elsewhere. However, for CA purposes, since the gain is deferred, not eliminated, the taxpayer will have to report the gain to CA in a future year when the OR property is disposed of in a taxable transaction. | |
| 5 November 2009 | |
| Echoing Dave -- it doesn't matter where the replacement property is located. If the taxpayer is a California resident when the replacement property is sold, all of the gain will be subject to California tax. If the taxpayer is a nonresident when he sells the Oregon property, the gain will be California source income to the extent of the difference between the fair market value of the property at the date of the exchange and his basis in the property.
See, e.g., the FTB Residency & Sourcing Technical Manual, Sec. 3340, p. 16 (http://www.ftb.ca.gov/aboutFTB/manuals/audit/rstm/3000.pdf). The example here is a 1031 exchange, but the same principles would apply to a 1033. | |
