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Get your taxes done using TurboTax
I have three different types of foreign taxes I paid last year. The ones reported on 1099-DIV ($1,000), ones reported on a foreign equivalent of 1099-INT ($500), and then the foreign taxes withheld on sale of the money losing inherited property ($15,000) (I have a 1099-S equivalent documentation from the foreign country for this sale.)
First:
Please confirm this is all PASSIVE CATEGORY INCOME. I don't see how the inherited house sale is GENERAL CATEGORY INCOME based on 1116 instructions.
Second:
When answering interview questions regarding the foreign tax credit, the 1099-DIV and pretend 1099-INT info carries over into 1116 automatically. However, for the sale of the house, which I have already reported on 8949, the capital loss information obviously does NOT carry into 1116. I can add $15,000 under passive income category for that country as other foreign taxes paid. However, my question is this: do I need to add the capital loss information of $100,000 from 8949 for inherited house sale manually into the following 1116 interview question (see below)? This results in a complete inability to claim any foreign tax credit this year, with a carry over into 10 years which I will not even use a fraction of as I am closing the bank account in the foreign country (done there) and my 1099-DIV foreign taxes are small year to year. I know I have the option of deduction vs. credit, but first I need to know the answer to my question so I am thinking about this correctly.