Which state is return required?

[Unregistered]

Taxpayer lives in MO, aging mother deeds/gifts a home in IA. Taxpayer sells the home. Where is the gain reported for state purposes? IA or MO, and why?

[Bees Knees]

All States Quickfinder, page IA-8 under Iowa-source income: “Nonresidents include in Iowa income capital gains or losses form the sale of real or tangible personal property if the property was located in Iowa at the time of the sale, and the sale of intangible personal property if the taxpayer’s commercial domicile is in Iowa.”

Why? Because Iowa says so, that’s why.

Sorry I can’t quote from TheTaxBook All States Edition. It isn’t out yet.

[taxmandan]

State returns

The capital gain is reported on both the Iowa (non-resident return) and Missouri, client's resident state. There will be a credit for tax paid to another state, probably on the MO return to avoid double taxation of the income.

[ED SMITH]

I would think you would have to report the income in both states. At least that's the case in California and a lot of states have adopted this position. Then a credit is applied to one state to offset the tax in the other, sort of like the foreign tax credit.
ED