Get your taxes done using TurboTax

Hi @pk ,

I'm just using this thread because I learned a lot thanks to you. Tomorrow is due, so I'm super nervous, but I'm trying to finalize my tax using TurboTax Online. My question is not about a vacation home, but it's an apartment unit  in South Korea, that I inherited on Nov 14, 2018 and I sold it on May 25, 2020. I heard that inherited property is considered as long-term gain (even if owning it less than 1 year), but I had it for about 1.5 years. I never lived there, and I didn't rent it out (there's some specific thing about it, but I'm simplifying this a little bit.)

I have 3 questions:

1. I was puzzled when I read your answers about "capital gain tax" or "transfer tax" can be used as sale  expense. In Korea, when someone sells a real estate property, they pay so-called "transfer tax" which is calculated based on the "gain" (i.e., sold price LESS acquired price). So I believe "capital gain tax" and "transfer tax" are the same thing in Korea. In my case, since it was inherited, the value of the property around Nov 14, 2018 was used as the cost-basis. Let's say I sold it at price $10,000, and cost basis was $7,000. And, in the sale process, brokerage fee was $200, and let's say I paid $800 to Korea's tax authority (let's say it's Korea's IRS). In this case, do you think I can use $800 as part of the expense? (Btw, I used the value $800 as the tax amount I paid to Korea, in Foreign Tax Credit interview screens (Form 1116). Here's an example that I entered in "Your investment sales" screen where you can report stock sales, etc.  In one of the line items there, I have these:

Brokerage: Good Morning Realty

Number of sales: 1

Proceeds from sales: 10,000

Cost basis from sales: 7,000

Adjustment: -1,000

Total gain or loss: 2,000

Does this seem correct, considering I put the sales expenses in adjustment? (1,000 was used because 200 + 800) Or am I not supposed to use 800 (tax that I paid to Korea's IRS) as expense here? (I think this will be put into Schedule D, I believe. Btw, I selected "I inherited" somewhere around this screen.)

2. I entered the information for Form 1116  (for Foreign Tax Credit) as much as possible, but there's one screen that I'm puzzled again. It's in the interview flow for Form 1116, and title of it is "Any foreign source qualified dividends or long term capital gains?" and small text reads: "Let us know how much of the income you reported for the following country was qualified dividends or long term capital gain income", and below that, it reads:

Country: Korea, South

Total foreign income for this category: 3,000

Foreign qualified dividends and l.t. capital gains: _________

I don't know if I should leave or enter 3,000 (because it was long term gain). When I tried entering 3,000 in the underline, my tax due increases (which is unfavorable) and I'm not sure if I was doing it correctly. (FYI, I don't have any other properties or assets other than this one that I sold last year.) And I used "Passive" category for this.

3. Also, do you think I can use TurboTax Online for this? In one of the screen, I saw the Help Modal titled "Form 1116 and Unusual Situations" and one of the bullet points was "Foreign taxes paid in foreign currency and you converted the amounts to U.S. dollars" and at the very bottom it says: "If any of these situations apply to you, you cannot use TurboTax Online to prepare your return". ===> I found this while I was meeting a CPA using TurboTax Online LIVE. The CPA suggested I should use Desktop version and I was trying Desktop version, but I found the desktop version was harder to use, and I couldn't find the screen that I could enter the info I mentioned in above #1. So, I'm trying to use Online version to file it, if it's okay.

Your advice would be greatly appreciated. Thank you!!