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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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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.
Slava Ukraini!
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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.
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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.
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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.
Slava Ukraini!
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That is what I was thinking, thanks for the confirmation.
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Always happy to try and help my southern friends 😁
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@Maxine From the IA DOR expanded instructions:
Nonresidents of Iowa should file IA return [if > $1,000] and report:
Wages earned in Iowa
- Income from Iowa property
- rental income
- capital gain on the sale of property
- Self employment income earned while working in Iowa
- Iowa unemployment benefits
- Iowa gambling winnings
- Income from pass-through entities, such as partnerships and S-corporations
_________________________________________________________
As you can see, investment income from interest and dividends are not listed.