Foreign capital gains

Forum|Forum|2 years ago
December 11, 2023
2 replies
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I have two questions:

1. I have invested in UK Investment trusts through my US brokerage account. Can I treat the capital gains and losses on these as foreign capital gains/losses for Form 1116?

2. I have US-based mutual funds that invest 90% of their portfolio in foreign stocks. Can I treat 90% of the capital gains or losses when I sell these funds as foreign capital gains/losses for Form 1116?

TurboTax Deluxe Online

Anonymous_

Level 15

@pk12_2?

SusanY1

Level 15

The investments that you describe are foreign capital gains and losses. The US-based mutual fund should provide you with some dividend and capital gain details in either the form of dollar amounts or percentages to match the foreign taxes the fund pays. You typically find this detail on the Form 1099-B.

Be aware that in the situations you describe, you also likely hold what the IRS will consider a Passive Foreign Investment Company (PFIC) which has additional very complex reporting. The form used to report PFICs is Form 8621.

This form is not supported by any version of the TurboTax program, though it can be attached to a paper-filed return with numbers manually entered into the program for the tax on the fund income. We recommend consulting a tax professional with specific expertise in this area to ensure you properly report any PFIC investments.

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