I have more specific questions with more specific information regarding firm 8949:
My father (foreign person) gave me (US citizen) gift of condo in Poland in 2012. Appraised value of this condo at that time was ~$142,719. I sold the condo in 2023 for ~$202,197. So, when I completed table in Part 2, I entered the following info: under column b - I listed 2012 as date acquired. Column c, sold - 2023. Column d, proceeds -202,197. Column e, cost, ir other basis - 142,719? Column h, gain ~$59, 478.
I was told that my calculations above were incorrect and that under US regulations, my profit to be reported on Form 8949 is to be calculated using value of the condo at the time my father bought it. My father bought it in 2005 for $65,790. As far as I know he did not make any improvements to the property, so, my reportable, but, obviously not real „gain” would be $136,407??? I do not understand the logic behind it.
This property was located in the foreign country. The property was bought and owned for 7 years by Polish citizen in his native country (Poland). I did not have any rights to the property before 2012. Why would I be required to pay capital gain taxes on the property I did not own? If I did not have any rights to this foreign property, why would the US government have any rights to this property before it was gifted to me (American citizen) in 2012. I can understand why these regulations would apply in the US or abroad if both giving and receiving persons were US citizens. Under this scenario someone had to pay capital gains for the whole time between 2005 and 2023, but, my father was foreign person and, I am sure, he complied with all Polish tax laws during this time.
In conclusion, i just do not understand why would American government collect taxes from me on capital gains accrued in foreign country during years when the property was owned by the foreign citizen?
One more point: in the instructions for „Column e - cost or other basis” to form 8949, „The basis of property you buy is usually its cost, including the purchase price and any costs of purchase, such as commissions. You may not be able to use the actual cost as the basis if you inherited the property, got it as a gift, or received it in a tax-free exchange or involuntary conversion or in connection with a “wash sale.” If you don't use the actual cost, attach an explanation of your basis.
The basis of property acquired by gift is generally the basis of the property in the hands of the donor.” Does this language opens possibility of using FMV at the time the property was given to US citizen by foreign person?
Would appreciate hearing your expertise on this topic.
