Welcome to Just Answers! Thank you for giving me the opportunity to assist you! I will do my best to help!
It is not unusual that an individual
has a different basis for Federal and State purposes. Many states do not use the same depreciation
methods, some do not allow the Homeowner's exemption, or, as in your case, §1031 exchanges. Many states, including New Jersey, put in exceptions to the like-kind exchanges, because too many people were giving up property in New Jersey, where the tax rate
is fairly high, and replacing it with property in other states where the tax rates are lower. These are often referred to as "claw-back" provisions.
I called a friend of mine at the NJ Department of Revenue
. She told me that gains and losses
are reported on Line 57 of the Form NJ-1040NR. The information is taken off the Federal Form 8949, with the exception that the basis information, which is reported in column E, is your adjusted basis FOR NEW JERSEY PURPOSES. It is NOT your Federal basis.
Normally, this adjustment
is calculated as a depreciation adjustment on the Gross Income
Tax Depreciation Adjustment Worksheet GIT-DEP, however in your case, there is no line or provision for reporting
different basis due to the §1031 Like-Kind Exchange.
I would therefore make a careful calculation for your records, so if the NJ Revenue Department should ever question the amount (which is unlikely in the first place) you will have ample evidence of the correctness of the calculation.
I hope this answers your questions! If you have any more, please feel free to ask! If you have found my answer helpful, please rate
me highly! I would appreciate it!
Thanks! Have a great week!