ARIZONA PASSIVE LOSS C/O FROM WHEN WAS NONRESIDNT ???

Technical topics regarding tax preparation.
#1
CarlCPA  
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I'm preparing an Arizona tax return for a new AZ resident who was previously a California resident.

He has numerous passive loss carryforwards relating to rentals located outside of Arizona.

My question is how does Arizona determine the amounts of such passive loss carryforwards (generated prior to his AZ residency) that can be utilized on his Arizona resident return?

I've been unable to find an answer to this question, so any help will certainly be appreciated!
 

#2
Nilodop  
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Seems to me that, right there on the bottom left part of page 8 of the instructions for Form 140PY, it says
ARIZONA COLUMN
Enter that portion of your federal income received while you were an Arizona resident in the ARIZONA column. For example, if you became an Arizona resident on June 30, enter all income you received from that day to December 31, 2021.
NOTE: If you also have Arizona source income for the portion of the taxable year you were an Arizona nonresident, also include that source income on the appropriate line in the ARIZONA column.
The Tax Reform Act of 1986 limits the amount of losses that you may deduct from passive activities. A passive activity is one that involves the conduct of any trade or business in which the taxpayer does not materially participate.
As a part-year resident, your Arizona gross income may include some of these losses. For the part of the year you were an Arizona resident, you may consider any passive losses that arose while an Arizona resident. For the part of the year you were an Arizona nonresident, you may consider only those passive losses that arose from Arizona sources. Your 2021 Arizona gross income can include only losses you used on your 2021 federal return.
. Emphasis mine.
 

#3
CarlCPA  
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Thanks Nilodop. It doesn't specifically address prior year passive carryovers (when the taxpayer was a CA resident), but I'll assume that only the amounts relating to AZ sources are allowed.
 

#4
Nilodop  
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EWell it sort of does; carryovers to a year are treated as lossesof th year to which carried, at least for federal. 469(b).
 


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