Foreign Property

[S T]

T/p sold real estate in Taiwan gain in US dollars is approximately $ 300,000. Not ever having reported sale of foreign property before, would this be reported on Schedule D and other stock losses would offset the gain?

Thanks,

Sandy

[Nashville]

Yes

Yes, any property sale anywhere in the world, I suppose. There might be restrictions on taking a loss in boycotted countries, but I don't have any specifics on that.

Depending upon the country, if you had a foreign gain or income, your client may also have to file a foreign income tax return. If there is any foreign tax to be paid, it may be eligible for Form 1116, Foreign Tax Credit.

Example, US taxpayer buys $3,000,000 in Australian Bonds, paying 3% interest, and after one year sells the bonds for $3,100,000 if the calculation were made in Australian currency. Australia requires tax reporting at Australian currency, so client must claim $90,000 in interest, and $100,000 in gain on the bonds. Suppose, for example, this results in the client having to pay $18,000 in Australian dollars.

However, the 1040 reports in U S Dollars. Although the purchase of $3,000,000 was made in U S Dollars, the sale of $3,100,000 converts to only $2,700,000 because of a whopping loss in the exchange rate.

US taxpayer reports the $90,000 interest (which must be converted to US Dollars) and a $300,000 capital loss. It's possible he may be limited to deducting only $3000. He also may be entitled to a Foreign Tax Credit of $18,000, but this also would have to be converted to US Dollars.

[S T]

Foreign Property Gain

It is a gain! Approx $300,000 US (conversion) gain between Gifted amount and Sale Price.
So trying to minimize US tax and Calif Tax.
T/p has about $100K in stock losses that are US investments - T/p is US Citizen, this was gifted property of her parents home in Taiwan at least 10 years ago.
will the US investments (loss) offset?

I won't have an overall Capital loss, on the return limited to $3K - Just trying to reduce capital gain.

Trying to obtain more info on whether or not she had to pay any foreign taxes to Taiwan on the property sale.

Thanks,

Sandy

[S T]

Guess no one likes my post

Can someone just confirm for me the following

Report of Foreign Real Estate Sale (guess you would say it is a second home) shows a gain
US Stock Sale Losses will offset part of the gain

All is reported on Schedule D

Thanks,

Sandy

[WhiteOleander]

Yes, the gain reported on Sch D would be offset by any losses reported on Sch D.

I keep trying to think of something that I may have missed. Why are you thinking that the losses can't offset the gain? Have you read something or just double checking?

[S T]

Like You

Thinking I am missing something - Haven't read anything to the contrary

Just "Miss self-doubting Thomas" here - have not ever reported a "Foreign Property Sale"

Anything else I should know or be aware of?

Fortunately, client let me know ahead of time - trying to strategize for year end 12/31/09 tax planning.

Thanks WO,

Sandy

[DonPriebe]

Anything else I should know or be aware of?

How about a foreign tax return and Form 1116?