Quote:
Originally Posted by ArturiusX
You pay Australian Capital Gains Tax on the sale. Your profit is counted as income in the USA. To see if you have to pay cumulatively I'd contact an accountant, but you'll probably only have to pay income tax in America at an amount - CGT.
(Yes, of course I'll verify whatever I read here.)
So I'd be double taxed then, according to what any reasonable person would mean by being double taxed?
That is, if my capital gain in Australia is G, and my income in America is I, would I pay a capital gains tax C in Australia, and then pay income tax in America on I+(G-C) (or worse still on I+G)? This would be being double taxed.
Or are you saying that I'd figure my income tax in America on I+(G-C) (or maybe on I+G), and then the American IRS would subtract C from that (i.e. give a foreign tax credit in the amount C. This would
not be being double taxed.
Edit: So maybe this is a question about taking a foreign tax credit in the USA. If you are a USA taxpayer, (so the USA taxes you on
all income from anywhere in the world) but you
have to pay some tax to another country, and just can't get out of paying it, then
1) does the USA always reduce your overall tax bill by the amount of the foreign tax (i.e. you get a `foreign tax credit') at least assuming there is some kind of tax treaty which should be the case, and
2) what if the tax credit is (much) bigger than your tax liability.
Actually C would be somewhat bigger than my American income tax, so I'd also have to see how that works. It would not help me if I couldn't carry it forward over a few years.
Last edited by thylacine; 05-25-2009 at 05:41 PM.