Foreign Interest from US Investment Companies

[LaughTrack]

I have realized interest from some bonds in Canadian banks that has been reported through my US investment company in US $  (and subject to US taxes, of course.)

Do I need to otherwise report this foreign interest since it is already reported through my US investment company?  If so, how?

[Mike9241 · Accepted solution]

If the amount reported is included in your return, you don't enter it twice. However, if foreign taxes were withheld, that information would need to be entered on the 1099-INT form in the foreign income tax section to create Form 1116 to get the credit, so you don't pay income taxes twice on the same income - once to the US and once to the foreign country.

[pk]

@LaughTrack , while I is no expert on  entity taxation,  and agreeing with my colleague @Mike9241 ,  you need to distinguish between  entity level and individual level incomes and taxations thereof.  What I read here sounds like, this Canadian income is  part of the gross income at entity level and therefore  recognized and taxed at that level.  If the income ( total  or partly ) flows to you on an individual level  ( K-1 or whatever ) then that  income  needs to be recognized and taxed at the individual level.

I am also assuming that your investment entity is a domestic entity and therefore not under the  PFIC rules

Does this make sense ?

[LaughTrack]

Yes, the interest from bonds of Canadian banks is included in my 1099 from my US RIC and commingled with the domestic interest.  As such, I won't separately report it.  There were no foreign taxes associated with this interest.