Form 1116

[mircpa]

Hello

Have a question regarding form 1116. Foreign stock sales transaction reported on Sch D, sales proceeds 129K, cost 59K.

Do I show gross stock sales proceeds income 129K on line 1a & cost 59K on line  2 of form 1116 OR net capital gain 70K goes on line 1 ?

Tax refund or payable amount is different in both situations. There is less tax of 2,500 in approach 2.

Can someone guide for correct approach.

[Lion EA]

How much foreign tax did they pay to the foreign country on Passive category income?

[mircpa]

8K

[jklcpa]

4 hours ago, mircpa said:

Do I show gross stock sales proceeds income 129K on line 1a & cost 59K on line  2 of form 1116 OR net capital gain 70K goes on line 1 ?

 

NET gain on line 1, but you should read the 1116 instructions starting on page 7 to see if you need to complete the worksheets and if any adjustment to that figure is required.

Line 2 is for expenses directly related to the foreign income such as work supplies purchased that would be directly related to foreign wages. Basis of stock does NOT go on line 2.