Back in 2004, a CA client refinanced a CA rental property and used the excess cash to purchase another rental property in Cincinnati. From 2004 through 2007, he reported the interest on schedule E for the original CA property. In 2008 he got religion and moved it to the Cinci property for all subsequent years. It makes no difference for federal and CA taxes, except for accurate reporting, but it does impact non-resident state and local taxes, since proper allocation yields NOL's that can carry forward to offset OH and Cinci taxes in later years. Is there any remedy for the situation at this point? I fear not.