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Tax Time - 2010 Roth Conversion opted to defer tax and now in different state
Old 03-18-2012, 11:10 PM   #1
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Tax Time - 2010 Roth Conversion opted to defer tax and now in different state

I made some Roth conversion in 2010 and elected to defer the tax to 2011/2012. My residency was IN for all of 2010 and the first part of 2011. During the last part of 2011 my residency was changed to TN.

Tennessee won't have a tax on the conversion but Indiana will. Since I'm a part year resident of IN for 2011, I need to split my income between the two states.

Does anyone have a clue how to do this? If I had done the conversion in 2011 and it was all taxable for 2011, I would say it would go to the state I was a resident of when I did the conversion. But there is something about the fact that it is a deferral that is confusing me - did I defer to the beginning of 2011(IN resident) or to the end of 2011 (TN resident) - or is it spread through the whole year so I take the % of time in 2011 that I was an IN resident to determine how much to claim there?
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Old 03-23-2012, 06:46 PM   #2
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This is probably unique enough it doesn't apply to anyone else here but here is the answer I found. My taxes were so complicated this year between two states and moving one business and starting a farm that I hired someone to help me with my taxes this year. He didn't know the answer to this question either but he called IN Department of Revenue and they told him to prorate the federal amount that was deferred to 2011 by the % of time that I was an IN resident. The amount deferred to 2012 will all go to TN. This probably would apply to other states as well (as long as they allowed the deferral to begin with). Doesn't matter what TN would say because they don't tax this income.

At least I have a name of the person who told him in case they decide to audit me later.
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Old 03-23-2012, 09:13 PM   #3
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Quote:
Originally Posted by Aeowyn View Post
This is probably unique enough it doesn't apply to anyone else here but here is the answer I found. My taxes were so complicated this year between two states and moving one business and starting a farm that I hired someone to help me with my taxes this year. He didn't know the answer to this question either but he called IN Department of Revenue and they told him to prorate the federal amount that was deferred to 2011 by the % of time that I was an IN resident. The amount deferred to 2012 will all go to TN. This probably would apply to other states as well (as long as they allowed the deferral to begin with). Doesn't matter what TN would say because they don't tax this income.

At least I have a name of the person who told him in case the decide to audit me later.
That is exactly what I was thinking as I read your original post. The "income" belongs in 2011 and 2012 and within each year it belongs to the state based on the portion of the year that you were a resident.

Seems to be a sensible result (so perhaps it isn't right after all).
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