K-2 ... Foreign Capital Gains

[nancy2]

Does anyone have any idea about the Foreign Capital Gains category and what goes there.  All of my input information is coming from a brokerage 1099.  They do not break out the capital gains for the foreign securities held in the accounts.  Are these considered foreign income?  Of course, we have never considered them foreign income before.  

Same with the asset values that we are to enter.  Would those securities be considered "foreign"?

TIA!

[Dusty2]

Scroll down the list a little and you will see the same question.

[nancy2]

Thank you for your response.  Sadly, I have searched and do not find this question.  Do you have a link possibly?

[Dusty2]

Does anyone have any idea about the Foreign Capital Gains category and what goes there. All of my input information is coming from a brokerage 1099. They do not break out the capital gains for the foreign securities held in the accounts. Are these considered foreign income? Of course, we have never considered them foreign income before.

Same with the asset values that we are to enter. Would those securities be considered "foreign"?

Someone will have to provide you with what Capital Gains were for foreign securities or you will have to review the statement security by security to make that determination.

I completed 1 and it was cumbersome.  Make sure you enter in ALL income on the partnership not just foreign.  Review each page (there are 20) and fill out all that apply in anyway to the information that you have.

Good luck

[nancy2]

Thank you for that response.  I guess what I am wondering is, is that the right way to treat it?  Those have never been considered "foreign income" before.  I could see the argument either way I guess.  Since those sales actually occur in securities accounts that are located within the US, is that really foreign income?  It never leaves the border.  Dividends are different because they originate in a foreign country and so they take their "cut" before it leaves there.  

Your thoughts?

I have probably 25 - 30 1099's.  So for one thing, I wouldn't even know if some of them are foreign companies.  And the cost associated with ME having to do that would be outrageous!  I have contacted the brokers and asked them to talk to their tax people about it to see what they say.  

[Dusty2]

Thank you for that response. I guess what I am wondering is, is that the right way to treat it? Those have never been considered "foreign income" before. I could see the argument either way I guess. Since those sales actually occur in securities accounts that are located within the US, is that really foreign income? It never leaves the border. Dividends are different because they originate in a foreign country and so they take their "cut" before it leaves there.

Nancy:

Great question and I think you answered it correctly.  Please let us know what you hear from their Brokers.

The one that I completed did not have any sales of foreign companies just dividends (it is a stock club).   Depending on how many partners you have you may need extra paper - the one I did had 12 partners and it produced an extra 8 pages for each partner.  Largest tax return we have ever had to print.

I am going to look for a class on this after tax season.

Dusty

[nancy2]

Thanks.  So, if those gains/losses would not be considered "foreign" income.  That would mean we wouldn't need to break them out for the K-2, wouldn't it?  And the asset values, since they are held in a US based account, would not need to be broken out either.  Does that sound right?

Honestly, I have searched and searched for an answer and every search comes up with information about non residents or property sales that occur in a foreign country.  Or, more discussion about dividends.  

[Dusty2]

Nancy:

This is a complicated form with a lot going on.  I can't answer these types of questions.  I took the information that I was given for the one that I did and it took me almost 6 hours to complete with reading instructions and studying the forms.

Dusty

[sjrcpa]

@nancy2  you are correct that capital gains in the US brokerage account are not foreign income. I don't have a cite but that's how its been for years.

I also agree that all stocks held in the US account are not foreign assets. That follows the reasoning used for Form 8938.

[nancy2]

It is intimidating!   I appreciate your response.

[nancy2]

Thank you.  I am thinking that is true also.  Just would be nice to find some authority that says that.  

[nancy2]

@Dusty2   If I could ask you another question, since you mentioned that you had a situation involving these transactions.  Were there enough lines on the ProSeries worksheet to enter all of the transactions?  If not, how did you get the rest of the transactions on the form?  Even just doing the foreign dividends I have, I have more countries than lines available.  And I can't find a way to reference an attachment with the rest of the detail and the amounts so that the calculations work properly.

Thanks so much!

[Dusty2]

@nancy2I only had 3 countries to enter so that was not a problem for me.  My only thought *shudder* is to call Proseries and ask them what to do.

Good luck.  If you find a resolution please let us know so we can help others.

Dusty

[nancy2]

@Dusty2   Thank you.  I don't think calling ProSeries is really a good use of my time.  I have never gotten a response from them.  Actually, I think I will start a new thread and see if any others have a solution.  Maybe since the whole thing has to be filed as an attachment anyway I will just need to override numbers.