@taoshu , agreeing with my colleague @JotikaT2 , and recognizing that you have not provided any information about what type of capital asset , how long held and indeed which country your asset is located in , the US tax treatment of capital assets is the same irrespective where the asset is located. Thus you report the transaction as if the asset was located in the USA.
The foreign taxing authority may have a different way of computing the capital gain but US does its taxation and computations under its rules. So US purposes you report the gain computation as if the asset was in the USA.
If the foreign taxing authority taxes this gain ( computed under its own rules ), then that income tax generally is eligible for "foreigtn Tax Credit/ deduction" to the extent allowed by US laws. Note this credit/ deduction is intended to ameliorate the effects of double taxation ( by both US and the Foreign Taxing authority ). However, this applies only to the federal taxes -- states generally do not recognize tax treaties between US and the foreign taxing authorities.
As @JotikaT2 has explained the FBAR ( FinCen.gov form 114 ) and FATCA ( form 8938 with your return ) are two additional regulations that may come into view for foreign financial assets ( not real estate ).
Is there more one of us can do for you ?
