OK, you Golden State Tax Warriors. What would you do with a trust that has an Arizona resident trustee and a California resident beneficiary? If it makes a difference, the grantor was an Arizona resident when the trust was established but is now also a California resident.
And the trust has taxable income, because of capital gains. There is no real estate, all of the assets are stocks and bonds.
Will California credit Arizona taxes owed? If so, am I correct that ProSeries doesn't have the Schedule S for trust returns, so it has to be done the old-fashioned way?
The situs of the Trust is AZ per the Trust Document?
Yes
So the capital gains should be taxed to AZ, shouldn't they? Even though CA has the stupid rule about having to file a return.
But are they also taxed to California, because that's where the beneficiary now resides? I thought I solved this puzzle a year ago, but now I'm having doubts. And I have another trust return with the same situation. I did both an AZ return and CA return. CA allowed a Schedule S credit (which I prepared manually) but there was still tax owed to CA. The amounts involved aren't much -- less than $100 in one case, less than $500 in another -- but they could be higher in a better year.
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