Thanks for the detailed response.
One last question just so I am clear...
For Federal, my income would include the gains on sale as long term gain and the tax would be calculated accordingly and then the foreign tax paid would be given credit for. A simplified example below:
Ordinary US Income- 100,000 (say adjusted)
Capital gains on sale of property- 100,000
Tax as per IRS- 40,000 (let say, 25000 on ordinary income and 15000 on capital gains at a preferential rate)
Tax credit for what was paid abroad- 20,000
Net Federal Tax= 40000-15000= 25,000. (15000 because that is what the IRS calculated as tax)
IS that correct?
Now for NC state, if there is no long term gains and no credit for foreign tax paid, for the state the income would be 200,000 and 5.25% on it (since no tax credit or long term gains tax advantage ) would be 10,500 tax. Is that right?
Thanks again,
