Foreign Tax Credit (FTC) and 1116. How do I introduce a capital gain?

[nc001]

I don't qualify for the exception. So I guess I'll  have to adjust capital gains (using Worksheet A or Worksheet B).

Does Turbo Tax do these adjustments or do I need to do them manually?

In which section of the Turbo Tax interview do I introduce the (adjusted on non adjusted)  capital gains?

[nc001]

I talked to a CPA in TurboTax and it didn't seem to be clear.

 'Foreign qualified dividends and lt capital gains' I think is wrong, it should not say 'lt capital gains'

Use  'Other Gross Income' 

[DaveF1006]

First of all, if your foreign tax paid was $300 or less, you do not need a 1116 to claim your credit. Regardless, you would first need to report this income under a 1099-DIV entry 

1. Go to federal>wages and income>interest and dividends>dividends on 1099-DIV
2. Report the company the dividend came from. The amount of the dividend, either ordinary, qualified or both.
3. Report the total capital gains distribution in Box 2a. This is the introduction of your capital gains distribution.
4. Check the box that says my form has more information than these boxes.
5. Enter the foreign tax paid in box 7. Now assuming we have $2000 in  ordinary dividends, $400 in capital gains and $500 for the foreign tax paid, we we will enter the second phase of this transaction.
6. Go to federal>deductions and credits>estimate and other taxes paid
7. Foreign taxes >start
8. As you navigate through the first couple of screens, Turbo Tax recognizes that you have entered a 1099-DIV. Your income information is already there.
9. Then it will ask you what country the foreign tax was paid to.
10. Next you will see a screen that is entitled income from foreign countries. Here you will pick the country and then select report income.
11. Next screen says report foreign income to XXXX. Select the checkbox.
12. now it will mention the amount of income you reported on the 1099 DIV. This would include ordinary dividends and capital gains. 
13. Next question asks if you wish to make the simplified election for AMT calculations, if you have an AMT situation. 
14. Your foreign tax credit that you reported on your 1099-DIV now appears on form 1116. 

[nc001]

Thanks for your answer. But that can't be right.

I have paid more than $300 foreign taxes and I don't qualify for the 1116 adjustment exception. No AMT.

I sold some foreign stocks hold in a broker in a foreign country (LT, no tax withhold)

LEt's say I got $1000 foreign dividends (all qualified). I enter this section on 1099-DIV.

Capital gains distribution is not the right place to add some foreign capital gains of selling some foreign stocks.

Capital gains distribution are related to ETFs, and foreign ETFs capital distributions don't matter, since foreign ETFs are taxed as PFICs

But even if I try to introduce those capital gains there, it doesn't work.  That capital gain distribution I entered does not change anything in the generated 1116 form. When it says 'Foreign qualified dividends and lt capital gains' , I can only introduce up to $1000. With my calculations, those foreign qualified dividends are used to calculate the qualified dividends adjustment and modify line 1a of 1116

But there is no place where I can introduce my foreign capital gains (again, from selling some foreign stock), and this capital gains are adjusted and added to line 1a

[DaveF1006]

You will need to make the adjustments manually to fit your situation. To report, you will report it as a regular stock transactions along with the adjustments.

1. Federal>wages and income>investment income>Stocks, Mutual Funds, Bonds, Other (1099-B)
2. Be sure to keep a copy of your calculations on how you made the adjustments and keep that in the folder of your printed 2020 return. 

[nc001]

I already created a 'fake' 1099-B with my foreign stocks sale. So that belongs to my US taxable income

But my question is how introduce that capital gain in TurboTax, so they become a part of foreign-income (needed to calculate the maximum foreign tax credit)

[tararengan]

This is exactly my situationas well. I am using Turbo Tax. Capital gains (from foreign sale of land)has been reported in a fake 1099B but I am interested in claiming the foreign tax credit. How is this done?