We signed contracts to purchase several condos about 2 years ago. These will be completed shortly. When we assign these contracts and receive our $$ at closing, I believe we will have LTCG treatment (and rates) on the gain. Opinions? These condos are in AL, but all the contracts, etc. were executed by me in TN. I will not travel in state for closing. Can AL tax these gains or are they attributable to me here in TN?
Thanks
In my humble opinion, your contract assignments are dealer dispositions -- ordinary income and self-employment income taxes apply regardless of your holding period.
AL will tax your income because the income was derived from sources within AL. TN will tax your income because all income earned by residents of the state is taxable regardless of the source. TN may give you a tax credit for taxes paid to AL on the income earned in AL.
Consult your tax advisor for specific details.