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I had a partnership which went bankrupt, and I have 1231 losses from this year. I moved to Oregon in June, and because the losses aren't broken down by month, I just took 7/12 of the losses on my Oregon return. Is that an appropriate way to divide this loss?

Here are the instructions:

"Other gains or losses. Determine the amount of gain or loss from Oregon sources for the part of the year you were a nonresident. Add the gain received or loss incurred during the part of the year you were an Oregon resident."

EDIT: I don't know if it matters, but I am not a material participant - this is just an investment.

  • When did it go bankrupt? – Ganesh Sittampalam Feb 18 '12 at 13:44
  • I don't know. Do I need to find that out? – Jeremy Feb 18 '12 at 19:06
  • As mhoran_psprep's answer points out, if it went bankrupt before the end of the year then 7/12ths is the wrong proportion. – Ganesh Sittampalam Feb 18 '12 at 23:34
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To answer the question you will have to know when you moved (June) and when the losses occurred. If the partnership went bankrupt before you moved you will allocate all the losses to the first state. If it went bankrupt after you will have to prorate it.

The 7/12 fraction you used might not be correct if it went bankrupt before the end of the year. Most of the losses could be in the first state.

I found some guidance in the help pages for Turbo tax regarding [part year situations]:

Method 2 for allocating earned income seems most appropriate:

Method 2: Estimate the number of weeks or months you worked at that job while you were a resident of one state and divide it by the total of weeks or months you worked at that job to come up with a factor. Then multiply the factor by the entire income from that job. Examples:

If you worked at that job the entire year and moved in early May, you earned roughly 4 months' worth of income (1/3 or 33% of your total income) in your old state. Multiply the income from that job by .33 to obtain the allocation for your old state; the remainder is allocated to your new state.

If you worked at that job for 39 weeks total (4 weeks while living in your old state) you'll divide 4 by 39 to come up with a factor of .1026. Then multiply the income from that job by .1026 and allocate that amount to your old state; the rest gets allocated to your new state.

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