@snwong79 ,
1. Please also read this page. Because US capital gain gets preferential tax rate treatment , you will need to adjust the foreign source income ( i.e. the amount that was taxed by the foreign tax admin ) for computation of the foreign tax credit -- if you take credit. ---> https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit-compliance-tips.
2.Note that the US capital gain ( long-term in your case ) may be different that that computed by the Foreign Tax admin --- for US it is Basis ( acquisition Cost ) subtracted from Sales Proceeds ( which is Sales Price less any sales expenses including transfer taxes etc. ). All this is in US$ of the day --- and thus is another wrinkle to consider.
3. Ideally , one should wait to file the US tax return ONLY after the foreign tax amount has been finalized as otherwise , one may have to file an amended US return .
4. This is passive income unless you are actively involved in this type of investment as a business
5. While the foreign tax may be recognized in full , the amount allowable for the year depends on a ratio of foreign income to world income ( taxes on thereof ). Un-allowed foreign tax credit can be carried back one year and up to 10 years forward -- but the rub is that you must have foreign income in that year to use the credit. The deduction however is limited only by the current limit on SALT ( State And Local Taxes) -- hopefully this provision will, be repealed soon.
Is there more I can do for you ?
