Question

Don Tumelson lived and worked in Arizona until April 21, 2017. At the beginning of April, Don accepted a job in San Francisco, California, where he bought a home and moved in on April 22, 2017. His moving expenses totaled $1,300. He changed his bank account to a local bank and registered to vote in California. Which of the following is true?

A. Don will file a part-year California return and will not be allowed to deduct the moving expenses. He would only be able deduct his expenses if he moved out of California.

B. Don will file a part-year return and cannot take the moving expenses on his California part-year return because it does not conform to the federal treatment of moving expenses.

C. Because Don moved into California, he will be able to deduct his moving expenses. He will show his expenses on Form CA (540NR), as applicable.

D. Because California conforms to the federal treatment of moving expenses, Don does not have to make an adjustment on his return.

Answer 1

Facts of the case:

1. Status for calculation of tax= Individual

( here i mean that assessment is for the individual and not for non-individual i.e corporate where the assessment of tax is different)

2. Assessment year= 2017-18 and last day to file return is April 17, 2018

3. Don tumelson (say Don) relocated on April 22, 2017

4. his moving expenses costed $1300

Answers:

A. False

Reason: Don has to file part year return for the period he was in California.; Only after 2018 tax reforms the moving expenses are not allowed as deduction. Before 2018 moving expenses were allowed as deduction; If Don moves from California, such moving expenses will be dealt according to the laws of the country where is moves and shall be reflected in the return of such respective country.

B. False

Reason: Of course, yes. He will file the part year return but also he will be allowed to deduct moving expenses as it related to the year before 2018 as I pointed out in option (A)

C. True

In Form CA (540 NR), moving expenses is allowed to be deducted and will be shown after making certain applicable adjustments in the Income adjustment schedule.

D. False

Reason: Certain applicable adjustments should be made in the Income Adjustment schedule. hence Don will have to make adjustments and the remaining will be deducted as Moving expenses in his return.