Foreign Tax Credit Computation Worksheet

[a-barton]

I'm a US citizen living and working in South Korea. I paid Korean local and federal income taxes out of my paycheck. I have a Korean bank account and also have a mutual fund back in America that reported foreign taxes paid on a 1099-DIV.

I'm trying to file my tax return. Turbo tax says the following items need fixing, and I don't understand the information it's asking. 

Line 4b2c: Adjusted basis for total business assets

Line 4b3c: Adjusted basis for total passive activity assets

Adjusted basis of total investment assets

I put zero into these boxes, because I'm not familiar with this terminology and it seems like it wouldn't pertain to me. But TurboTax says the number must be larger than zero. Does anyone have a suggestion of how to find the correct number?

[ThomasM125]

Adjusted basis would be calculated by starting with your original cost, then then adding things that increase your basis and subtracting things that would reduce your basis.

In the case of business assets, your cost would be what you paid for the asset, and reductions in basis would be depreciation that was deducted on your tax return that was associated with the assets.

Passive activity assets would be assets that are owned by a passive business that you have an ownership in, such as a partnership that is involved in real estate.

What schedule or form are you working with in TurboTax when you see these questions?

[a-barton]

This is on a Form 1116-Foreign Tax Credit form. The thing I am confused about is I don't own a business, so I'm not sure why it is requiring me to put non-zero numbers in business assets. I work for a foreign company so I don't get a W2. Perhaps the program is confused about where my income is coming from. I only have some RIC mutual funds which I don't think are relevant to this question.

Thanks for your help.

[elvedon]

Did you ever get an answer to this question?  I am having the same problem.

[rogge1722]

If TT raises an issue regarding “investment interest expense” and it is not relevant, here is a work around.

Bring up the f1116 computational worksheet and insert in the following lines:

4b (1) a = 0

4b (1) b = 0

4b (1) c = 1

If the issue is “trade or business expense” then:

4b (2) a = 0

4b (2) b = 0

4b (2) c = 1

If the issue is “passive activities interest expense” then:

4b (3) a = 0

4b (3) b = 0

4b (3) c = 1