USA New York & Calif house sale cost basis differences


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My mother moved from New York State to California in 2015 and sold her former NY state home in the same year. Because of the sourcing rules in each state, the gain from the sale will be taxed in each state.

The house was originally purchase in the 50's and my father died 10 years ago. Because California is a community property state, it is my understanding that California would determine the adjusted cost basis differently than New York and the federal government.
For simplicity, lets assume
House purchase price of $100,000
Value at husband's death $600,000
House sold for $1,000,000
No improvements were made to home.

The cost basis for Federal and NYS purposes would be
half of original cost for the wife = $100,000/2 = $50,000
+ step up at time of husband's death for his share = $600,000/2 = $300,000
The adjusted basis then is $350,000 with a taxable capital gain of $400,000 after the $250,000 exclusion.

For California, as a community property state, the adjusted cost basis would equal the step up value of house at time of husband's death or $600,000 with a taxable capital gain of $150,000.
The resulting tax in New York State is significantly higher than in California.

California permits you a credit on taxes paid to another state for the same income using Schedule S. I am not sure NY permits the same or what is the criteria for choosing which state does the crediting.

Does all this look right.
Thanks, Jay
 
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