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Anonymous
state level capital gains reporting 2016-07-14 06:00:48 Post No. 1380727
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state level capital gains reporting 2016-07-14 06:00:48 Post No. 1380727
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Let's say you live in California, which has state taxes on capital gains.
You buy a stock, it goes up in value, you sell it. (short/long term doesn't matter)
Does your broker notify California at EOY that you made $xyz in capital gains? How does California know that you owe them tax?
If you buy a stock in California, move to another state, then sell it, does your broker notify both states? Do you pay a tax rate in each state relative to the amount of time you lived there while holding the stock?
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>>1380727
Your broker reports (on form 1099-B, iirc) the transactions that you made, not your profits or losses. You broker doesn't necessarily know what tax treatment you select (FIFO, average cost, etc.) so its not their job to report your gains or losses. They will only say that you bought X shares or sold Y shares.
So if you don't report a gain or loss, the taxing authority is probably going to know that something is missing.
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>>1380745
Thanks for the name of the form, seems like that's the right one.
Do you know if they'll issue one to BOTH states if you change states while holding a security and later sell it? I'm planning to move in a few months and I'm curious what will happen next tax season.
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>>1380778
I believe (but don't quote me on this) that the broker only sends the 1099 to the IRS. Each state can request copies of the forms from the IRS for its citizens. So any state you file in would potentially have a copy in its database (its all computerized, of course). By the same token, they might also overlook it.
Usually not worth the dice when it comes to tax evasion. The penalties and interest are murder even for small-time stuff.
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>>1380778
As long as you hold on to your assets i.e. don't sell, you are allowed to change residency and declare a different state's tax treatment on the full appreciation of those assets.
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Cant you also just hold the assets and any gains in an S Corp? Until the monies are dispensed, you don't pay taxes on them because it's a pass through entity.
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>>1380889
You don't pay taxes as an individual until you sell either, so your suggestion doesn't accomplish anything..
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>>1380894
My point was that you could sell, and the S-Corp just holds the profits until you move to a state that doesn't tax them.
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>>1380896
Maybe, but if the S Corp doesnt pay out the profits, the IRS/state might insist that anon take a fair market wage instead.
I think a self-settled trust would be much much more effective for what you're suggesting.
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>>1380906
Yeah I guess a trust would be a better vehicle for that purpose.
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