Question

For the Form 1116, which Foreign Income Category type does capital gain made from stock trade fall into?

Forum|Forum|7 years ago
June 5, 2019
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I am working on the Form 1116 Foreign Tax Credit for the capital gain made from a stock trade in a foreign country. Which Foreign Income Category type does this capital gain fall into? According to the TurboTax help guideline, I think it would be General Category Income but it's not clear to me. Thank you.

TurboTax Premier Windows

D

DS30

Employee

Income from capital gains will be considered passive income so any foreign income taxes paid on this income will fall into the passive basket.

See this link Claim Foreign Tax Credit

C

citoyendumonde

The previous answer ignores the case when the taxpayer is a resident of a foreign country that has priority in taxing said US taxpayer and that taxes those capital gains at a rate higher than the US does, in which case TurboTax would be correct, that such income is General Category.