wife who is u.s. citizen dad passed in 2022. He was canadian citizen. She inherited half of his tax free retirement accts (RRIF & TFSA). Between when he passed and the account were liquidated and she got her half of the distribution. The accounts increased in value by $10k. Bank in canada paid 25% taxes on the $10k as gross income and send us NR4 with the $10k as gross income and taxes paid of $2,500 to canada tax authority.
The $10k from my standpoint was a short term capital gain from the stock sold and because my wife is a non-resident of canada, they automatically took out 25% for taxes. All amounts are in canadian dollars.
How do I report this in Turbo Tax/u.s. tax return? My initial analysis says: 1. report the $10k in u.s. $ as short term capital gain on schedule D and report the foreign tax paid in U.S. $ on form 1116 for a tax credit. Also assume form 3520 Part IV needs to be filled in if over $100k.
Have tried to find tax professional for help, but so far no luck.
Thanks
Ron
