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  • slewfan slewfan Apr 9, 2009 10:00 AM Flag

    Foreign tax credit- a pecentage only?-

    IRS instructions for line 47 states that all of your foreign source income has to be from interest and dividends, since this is royalties you have to use 1116

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    • So let's say that 15% of the dividend is withheld for foreign taxes. And let's say that the K1 shows that half of that is a non-taxable return of capital.

      (It's been a couple weeks since I paid my taxes, I may be misremembering things)
      This results in the following:
      You cannot claim the full credit for foreign taxes paid, since the amount which you would pay in US taxes is less. There's a little math to determine how much of it you can claim as a credit. The excess gets carried over.

      This would seem to imply that if / when a US owner of PGH sells (wishful thinking applies), that the carryover might be applied against the capital gains (if any)?

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