My Question Is Can I Reduce My California Capital Gains
Q: I have the following situtaion was hoping to get some input:
I reside in California with my wife and have for the last three years. Within the next 3-4 months I expect to make a significant capital gain on the sale of real estate assets held by a Chapter S corp located outside of California (as are the assets).
While my wife does earn wage income, I do not.
In addition the Chapter S shares are held in my name only and have not been comingled.
My question is can I reduce my california capital gains tax by relocating to a no income tax state and filing a married but separate return while my wife remains in California?
A: Relocating to a no income tax state would help. Filing a MFS return in California probably would not, as half her wage income would be attributed to you on your separate California return. The relocation has to be real, though. If you intend to move back after the sale, it's no good. If you DO move back after the sale, California will try to demonstrate that you intended to. .