My husband harvested and sold a block of trees in New Zealand in 2022. We live and work in the US. I know there is a US/NZ tax treaty in place. We have not yet filed taxes in NZ related to this sale as they are not yet due (this is our only income in NZ other than interest on a bank account which we are already including on our 2022 US tax return). The basic formula when we file in NZ will be gross income less costs related to planting, harvesting, etc. I'm not sure how to deal with this income on our US tax return. Is it a capital gain? Is it passive income? The tax rate there is higher than our tax rate here so I'm hoping we would be getting some sort of foreign tax credit similar to foreign taxes paid on foreign interest and dividends. Also, how do we deal with the timing discrepancy as it relates to filing? Do we wait until 2023 to report the NZ forestry income? Any guidance on this issue would be much appreciated.
