A.G. Kalman wrote:
- quote -

I should have added that the treaty with Israel has a
"savings clause."

--
Alan
http://taxtopics.net

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VSLARRY[at]weizmann.weizmann.ac.il wrote:
- quote -

A US Citizen files a tax return just like he was living in
the US. He may avail himself of all tax benefits. This
includes the foreign earned income exclusion. If the treaty
allows the foreign country where he is a resident to tax his
capital gains, then he can use the foreign tax credit to
offset any tax he is paying to the US on those gains.
Naturally, the credit is subject to the limitations
identified by law. E.g., the credit will not be higher than
the tax paid to the US on the gain.

--
Alan
http://taxtopics.net

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<VSLARRY[at]weizmann.weizmann.ac.il> wrote:
- quote -

You should read the treaty, and the letter of explanation
sent to the Senate with the treaty for confirmation, very
carefully. I am not an expert on all tax treaties but they
gererally follow the models that have been published -- by
the IRS, the UN, and other internationaly organizations. I
do know the treaty with Thailand and know that the various
provisions are identified as conforming to the models or
explaining the deviations.

As far as I know, all US tax treaties contain what is
referred to as the "saving clause." Under this clause, the
US reserves the right to tax US citizens and permanent
residents WITHOUT REGARD TO THE PROVISIONS OF THIS TREATY.
In other words, even though the treaty may exempt certain
types of income, such as capital gains, from US taxation, in
certain circumstances, those circumstances usually do not
apply to US citizens.

Under the Thai treaty, Thia citizens may be exempt from
capital gains taxes on transactions in the US. The treaty
refers to these as Thai residents but the definition of
residency is NOT the same as it is for the Internal Revenue
Code. Thus, a US citizen who is also a resident of Thailand
is NOT exempt from the US capital gains tax -- whether the
transaction is in Thailand or the US.

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"A.G. Kalman" <agk202[at]netscape.net> writes:

- quote -

Well, we're back to the original question :-). There is a
tax treaty saying that capital gains are taxable in the
country of residence (= tax home).

What I wanted to know is how to fill out the Schedule Dfor a
U.S. citizen in such a case, especially if there is a
long-term capital loss carry-forward. especially where there
is

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VSLARRY[at]weizmann.weizmann.ac.il wrote:
- quote -

US citizens are taxed on their worldwide income. If the US
citizen is a resident of a foreign country that taxes his
capital gain income, he would probably be able to claim a
foreign tax credit on his US return. In addition, one also
has to see if a tax treaty exists between the two countries
and what it says about taxing capital income.

--
Alan
http://taxtopics.net

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"A.G. Kalman" <agk202[at]netscape.net> writes:

- quote -

Well, what if this person is a US citizen residing, and with
a tax home, abroad? To add a little spice, what if he also
has a capital gains loss carried forward?

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VSLARRY[at]weizmann.weizmann.ac.il wrote:

- quote -

It is not where you reside. It is the country where you are
considered a resident for tax purposes because you pass the
substantial presence test or you are a lawful permanent
resident (green card holder) that will tax the gains. If
you are a resident of the US, you complete the Schedule D
just like a US citizen completes it. If you are not a
resident of the US and the gains are not effectively
connected to a business in the US, then there is nothing to
report. Buying and selling securities through a US broker is
not operating a business in the US. See IRS Pub 519, US Tax
Guide for Aliens for more details.

http://www.irs.gov/publications/p519/index.html

The above assumes we are not dealing with immovable
property, ships and planes, etc., as most treaties have
special rules for those types of assets.

--
Alan
http://taxtopics.net

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If a foreign country and the United States have an income
tax treaty that states that capital gains taxes are payable
in the country of residence, how does that foreign resident
fill out a Schedule D?

Does he not fill it out, and specify that he is paying to
the foreign country on form 8833? Or does he fill out all
the gains and losses, but not the tax calculation, and
explain on form 8833? Or something else entirely?

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