My father inherited me a piece of land in Nicaragua. I want to sell it and I am planning to wire the money from the sale directly to my bank account in the US. It is about $100k. Do I have to report this money to the IRS? Do I have to pay any taxes on that money?
Thank You,
2007-07-29 05:40:14 · 4 answers · asked by Juan 1 in Business & Finance ➔ Taxes ➔ United States
If you are a US citizen then you are taxed on income that you earn no matter where in the world that you have earned it. You will need to keep track of several things in this case though that may help with your taxes. First of all, you need to know what the value of the land was when you inherited it from your father (I'm assuming that you inherited it when he passed away?). The value of the land on his date of death is your cost basis, which you will subtract from your sale proceeds of $100,000 to figure out what your gain, if any, is. Also, inheriting anything automatically makes the gain from selling long-term gain, which is taxed at a preferential tax rate, maximum rate of 15%. Also, if there are any taxes that you owe to Nicaragua in relation to the land you can get a full or partial credit for that on your tax return. You would fill out form 1116 to figure out how much, if any foreign tax credit you get.
2007-07-29 08:06:00 · answer #1 · answered by Anonymous · 1⤊ 0⤋
If there is any gain on the sale, that gain will be taxable. You still get the stepped up basis through inheritance so if you sell it for that or less there will be no taxable gain.
Sales of foreign property are the same as sales of US property. There are not differences as far as taxes are concerned.
You'll have to report the transfer of that much money to the Treasury Department but that is just for tracking funds to ensure that they are not due to illegal activity. If you have documentation of the inheritance and the sale there won't be any issues there.
2007-07-29 05:48:54 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 1⤋
Absolutely. Income is income and all income is taxed.
You might want to talk to a tax specialist.
Since the holdings are offshore, you may be able to open an acct there or in another country and avoid taxes that way.
I know that's one reason so many politicians and the rich have off shore interests, so they can reduce taxation.
2007-07-29 08:23:58 · answer #3 · answered by alisongiggles 6 · 0⤊ 0⤋
If you are a US resident you have to report the sale to the IRS. If you make a profit from the sale after deducting allowable cost basis, you have to pay tax on that profit. The US tax code says you pay income tax on your income from ALL sources.
2007-07-29 08:07:02 · answer #4 · answered by Zujiya 2 · 0⤊ 0⤋