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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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are non california capital gains (i.e gain from stocks which

Resolved Question:

are non california capital gains (i.e gain from stocks which are not headquartered in California, if that is the definition) taxable for a full time california non resident for 2007 taxes (if that makes a difference)
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.



I am not sure I understand your question.


You said you are (or were) a non resident of California for the year 2007. Is that correct?


I assume you had some stock sales in 2007. Were these just regular stocks that you trade on the stock market?


Are you asking if the gain on these sales would be taxable in the state of California if you were a non resident?


Any further clarification you can provide on your situation will help us to answer your question.




Edited by Merlo on 1/1/2010 at 3:37 PM EST
Customer: replied 7 years ago.

Merlo, I find it interesting that you specialize in returns for US citizens living abroad - I lived in Europe for 25 years and am now ' reentering' back to the US. Where do you practice?

I lived in Europe in 2007 but had Calif income (interest &, dividends). In addition, I had some regular stocks that showed a gain in 2007.

So, yes, are these gains taxable to California when I file a non-resident tax return.

(are you qualified to practice in California?)

Thank you

Expert:  Merlo replied 7 years ago.



No, I do not practice in the state of CA. I am located in the state of Missouri, but will be happy to at least help you with this question.


First, can you please confirm to me that you are a US citizen.


Assuming that you are a US citizen, did you file US tax returns during the time you lived in Europe?



Customer: replied 7 years ago.
yes and yes
Expert:  Merlo replied 7 years ago.

Hello againCustomer


As I assume you know, as a US citizen you are subject to US income tax on any income that you have worldwide, regardless of where you live or the country where that income is earned.


However, if you were a permanent resident in Europe for 25 years, then you no longer had any ties to a particular state here in the US, and would only be responsible for federal taxes. The only way you would be subject to CA state taxes is if you had income from a California source.


You would need to file a tax return for 2007 and report any interest and divdends that you received, and any gains that you had from the sale of stocks, and any other income that you had for the year. However, you would not be required to file a California return or pay any CA state taxes. You were not a resident of CA at the time, so CA state taxes would not apply to you for that year unless you had income from a CA source. If you had no CA source income, then you would not even be required to file a non resident return with that state.


If this was helpful please press the Accept button. Positive feedback is also appreciated.


Thank youCustomer/p>



Customer: replied 7 years ago.
I am well aware of all that you have stated. I do have income from California sources, hence the need for the return. My specific question regards XXXXX XXXXX on stocks. I am filling out the 540 NR, and the term ' california sources' is not defined. My tax program adds my stock cap gains to my California interest and divs, however, I don't understand why this is considered income from Calif sources. I don't know if you have enough knowledge of Calif St taxes for this specific quedstion.
Expert:  Merlo replied 7 years ago.

Hello againCustomer


Thank you for the clarification on your question.


There is really no difference between the states as to what is considered state sourced income. You are considered to have income from a state if you physically work in that state and earn income, or if you have a business which is located in that state. You would also have CA source income if you sold property that was located in that state.


If you sold shares of stock of a company that you owned which was located in CA, you would have CA source income. However, general sales of stocks that are traded on the stock market would not be taxable to you in CA, regardless of which stock it was that you sold. For instance, if you owned stock of Chevron Corporation which is headquartered in California, you would not owe CA taxes on the sale of that stock just because the company is headquartered in that state.


When you sell stocks that are listed on one of the stock exchanges, you are only responsible for taxes to the state where you are a resident. Since you were not a resident of any state in 2007, your only tax liability on those sales would be to the IRS and not to CA or to any other state.


Without seeing the tax program that you are using, I cannot explain why it would be adding these to your California income, as these sales would not be taxable in the state of CA, or in your case, to any state. You will only owe federal tax on any gain you had from these sales.


If this was helpful please press the Accept button.


Thank youCustomer/p>




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