How can I report stock sales (gains/losses) for stocks held on a foreign stock exchange in TurboTax?

[MMehta]

I own stocks on India's stock exchange and file tax returns annually in India. In 2024, I incurred losses through tax-loss harvesting strategy. I have a few questions: 1. Since I don't receive a 1099-B form, how should I report these gains/losses in TurboTax? 2. If I claim these losses when filing tax returns in India, I assume I cannot claim them in the US. How should I report this in my US tax returns? 3. Do I need to report each individual sale and purchase?

[DaveF1006]

If you are just reporting transactions that resulted in  tax-loss harvesting losses in India, you generally cannot claim them again in the US due to double taxation rules. The India-US Double Taxation Avoidance Agreement (DTAA) helps prevent duplicate tax claims.

[MMehta]

Thanks for your response, DaveF1006. Do you have pointers on how do I report these transactions in TurboTax without claiming losses? 

[DaveF1006]

Yes, report these as investment sales. 

1. Open or continue your return.
2. Navigate to the investment sales section:
   • TurboTax Online/Mobile: type investment sales in the search bar. select the jump to link.
   • TurboTax Desktop: Search for investment sales and then select the Jump to link.
3. Answer Yes to the question Did you sell any of these investments in 2024?
4. When you arrive at screen that is labelled OK, let's start with one investment type
5. Select stocks, bonds and other.
6. Go through the section until you arrive at a page that says sales details, answer the questions that are presented.
7. When you report the proceeds and basis, make sure your basis is less than your proceeds. Your basis is what you paid for the stocks and the proceeds are what you received for them.

if these stocks suffered a loss because of a harvesting loss, there isn't much point of reporting these on your return since you can't take a loss under the terms of the The India-US Double Taxation Avoidance Agreement (DTAA). 

@MMehta 

[MMehta]

Thanks again, DaveF1006.

Conversely, I believe that if I don't claim these losses in India, I should be able to claim them here. Since I don't have a 1099-B form for these stocks, I followed your suggested steps and reached a point where I could report the following -

On the next page, I got below where I selected Skip - 

On the following page, I got the message that I will need to send 1099-B to IRS. Any suggestions on what and how I need to send this information to the IRS?

[MarilynG1]

I don't believe you can file this way.  An investment sale has to have 'Proceeds' whether it a gain or a loss when compared to Cost Basis.  Your entries show you 'gave away' stock that cost you $100. 

You could report Proceeds as equal to Cost Basis, so no gain/loss is reported. 

However, you can't upload or mail a copy of your 1099-B since you don't have one.  If you sent documentation of the sales with a mailed return, then you may get questions from the IRS on why you're not reporting the sales/loss correctly on your return.  You could also include a statement as to why you're not claiming the loss, but I'm questioning at this point if you even need to report this as a stock sale at all.

If you have other types of foreign income (dividends, wages, rental income, self employment income) that you paid Foreign Tax on, you could combine them into one entry for a foreign tax credit.  If this applies, report the total amount of foreign tax you paid, and the foreign income amount (total for all, less losses).

Here's more info on Claiming the Foreign Tax Credit and discussion on Foreign Capital Gains/Losses.

@MMehta 

[MMehta]

Thank you for your insights, MarilynG1. Although I have some foreign interest and dividends, they are significantly less than the loss incurred from selling stocks. After considering your and Dave's advice, I'm inclined not to report these stock sale transactions, as I don't intend to claim the loss twice—once in India and again in the US.