@Sunny47 , Namaste ji.
Thank you for the explanation. I would like to add the following:
For US tax purposes ONLY:
(a) Recognition of sale of immovable asset ( farmland, undeveloped land, h...
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@Sunny47 , Namaste ji.
Thank you for the explanation. I would like to add the following:
For US tax purposes ONLY:
(a) Recognition of sale of immovable asset ( farmland, undeveloped land, house , condo, rental prop, commercial prop. etc. ) in India must be done in the calendar year the actual transaction takes place
(b) For gain/loss computation,
(1) Gain/Loss = Sales Proceeds ( Sales Price Less sales expenses such as transfer tax, commission, sales prep expenses etc. etc. ) LESS Adjusted Basis ( Cost of acquisition + Cost of any improvements during holding period LESS accumulated depreciation, whether recognized or not ).
(2) Conversion to US $ from INR should be done contemporaneously using any published exchange rate ( such as annual average rate published by the US Treasury etc. ). Must use the same method for all conversions and generally good record keeping is advised.
(3) Tax treatment i.e. ordinary gain vs. capital gain etc. is based on US tax laws.
(c) Foreign Tax Credit
(1) Indian tax laws are completely ignored i.e. whether the Indian Tax was based on Indexation ( and at 20% tax rate ) or No-Indexation ( and 12.5% tax rate ) is immaterial for purposes of Foreign Tax Credit.
(2) FTC is based on final taxes paid to India and not TDS ( Taxes Held at Source).
(3) Only Income Tax is eligible for FTC
AS you see from the above there is no place for the indexation of basis to affect the US taxation and/.or the FTC.
Does this make sense ?
Is there more I can do for you ?
Namaste Sunny ji