NC resident sells real property in GA

[DonnaA]

I prepare my niece's NC return, but I am a SC tax preparer. In SC, out-of-state income from a business, rental property, or gain from sale of real property is a subtraction from federal income to determine SC taxable income. I can't find any comparable provision is the NC instructions or at the NCDOR web page. Is this income taxed to NC, with a tax credit for taxes paid the other state?

[Terry D EA]

You are correct, this is income to NC and there are no provisions to deduct this from the Federal Income. The sale of this property is taxable as a gain to the Fed's then it is taxable to NC as NC begins calculating the tax liability based on the Federal taxable income. Hope this helps.

[JohnH]

Chances are GA will want their pound of flesh as well. If so, NC will allow a credit against the NC tax liability, limited to th lesser of the GA tax or the proportional NC tax on the gain. You us schedule TC to do the math, and attach a copy of the GA return to the NC return to support the entries on the TC.