I am doing a return of a foreign national. He has three properties with PAL carryover-2 in Europe and 1 in the US. He left the US in 2015 and returned to Europe. I need to file a 1040 NR for 2016 on the US property only. How do I handle the PAL carryover on the European properties.
-
-
I spent a few minutes doing a cursory review of the PAL rules, and I saw nothing that made an exception for property located outside the United States, for resident aliens, or former resident aliens. This doesn't mean it's not covered somewhere in the tax laws ... just that I didn't see anything relevant. Questions like yours are rare on this board, so you would probably be well-advised to do your own research.
My guess ... and I know you can do your own guessing, so someone else's guess might not be worth very much ... is that the suspended losses for the foreign properties get dropped. That's because the income or losses on foreign assets owned by a foreigner not subject to U.S. taxes on his non-U.S. income or property is not reportable on a U.S. tax return. Thus, it makes no sense that income from your client's foreign properties should serve to release suspended PALs from his U.S. properties.
I would estimate that the likelihood of the above "guess" being correct is about 30%.Roland Slugg
"I do what I can."
Comment