State Taxability of 6252 Interest Payment

Forum|Forum|6 years ago
March 2, 2020
6 replies
35 views

I have always followed the rule that interest received is taxed by the taxpayer's home state. However this one is giving me a headache. Taxpayer's inherited an installment sale of farm ground in a different state. I have all of the information needed to file the 6252, no problem there. However the buyer (who is out of state) issued them a 1099int for the interest portion and since that is a part of the installment sale income should it go on the non-resident state return with the principle portion or is it income to the home state. Thanks for any advice, I need to get this finished off and out the door.

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Best answer by IRonMaN

I don't do MO and I try to avoid IA whenever possible, but the interest sounds like it would be considered source income in the state where the sale took place.

BobKamman

Level 15

I think it might depend on the state, and it might make a difference that this was a business (farm) rather than, for example, a private residence or raw land.

M

MaxineAuthor

Level 5

Yes it was a farm. I know when they came in last fall and I calculated an estimated tax payment for MO, I only incuded the principal portion thinking that the interest would be taxable to IA (home state). Now I am doubting myself since the interest is part of the installment agreement from MO.

IRonMaNAnswer

Level 15

I don't do MO and I try to avoid IA whenever possible, but the interest sounds like it would be considered source income in the state where the sale took place.

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