Capital gains tax due when moving from state to state?

Question

Assume someone sells some captial asset and realizes a short-term capital gain on 1/1/07 while living in a state with an income/STCG tax rate of 10%. On 4/1/07, they establish residence in a no-tax state (e.g. Florida). Assuming they have no other income in that year, and ignoring all deductions, etc, how much state tax is due to the first state on this gain? The full 10% or a pro-rata rate based on the time this person spent in each of the states during the calendar 2007?

Answer 1

You will owe the whole tax for whatever transactions took place while you lived in that state. If you had sold the asset after you moved to the no-income-tax state, you wouldn't owe anything.

Answer 2

I believe it's pro-rated, dependent upon how long you lived in the state (just like your state income taxes are pro-rated). However, since you received the gain while actually still living in the state it may be the full tax rate - Definitely a question to ask a CPA, or, you could contact the state treasurers' office as well. This kind of questions are kind of sticky and depend on the tax laws of each state - which kind of sucks...

Answer 3

This definitely depends on the states involved. Some states allow you to choose the greatest tax benefit to you, others allow pro rata, some require the tax paid to the state in which you resided at the time of the transaction.