Hello,
I realize FTC is credit for foreign taxes paid for which you are subjected to US tax on the same income.
How would one deal with this scenario (see below), I am sure many have come dealt with before.
Hypothetical Scenario: A US resident in Year 2012 purchases 100$ worth shares of Mutual bond fund A (@ 1$ per share). The person later relocates to Germany and is a German tax resident starting 2022. In July 2022, that person sells the share lot when the price is down for 90$ (@9 $ a share). For US tax purposes he would register a loss of 10$ (90-100= -10).
If Germany insists on converting both these transactions to Euro using rates at purchase and sale (lets assume at purchase rate was 1 US$ = 0.75 Euro in 2012, and 1 US$ = 1 Euro in 2022), then this transaction results in a 90-75=15 Euro gain.
In above scenario, by US dollar there is a loss of 10$ registered, whereas Euro conversion leads to a Gain.
My question is can anything be done with the taxes paid in Germany for this gain? Is there any other recourse, or ideas how one would handle it. Has anyone experienced this before? I would think one would come across this scenario if one held US federal tax exempt Mutual funds also. I would appreciate any feedback, Thanks.
