laxmiv[at]yahoo.com wrote:
- quote -

Reinvesting in India or bringing the proceeds into the US is
irrelevant to US (and state) taxation of the gains.

If she owned and lived in the property for 2 years (730
days) in the five years preceding the sale, she probably
qualifies for the $250,000 exclusion (although I haven't
checked whether a foreign residence qualifies). If that's
correct, she would owe approximately $37,500 in capital
gains tax. I haven't dealt with part year resident issues,
so I don't know how the standard deduction and exemption
amount apply or may be prorated between the 1040NR (showing
no income) and the 1040.

Sorry I couldn't be of more help. It should be noted that
this return was due on April 15, so penalites and interest
are accuring.

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philmarti[at]aol.com (Phil Marti) wrote:
- quote -


Phil, thanks for replying. The lady sold the house after she
became a US Resident in 2003. She became a US resident in
early 2003. And sold her primary residence in India in Nov
of 2003.

She just filed the tax return in India, where the tax year
ends on March 31. They got a copy of the return and then
decided to call me to find out whether there is any US tax
liability.

As I mentioned earlier, the Indian tax return shows zero
capital gains after adjusting for the investment in the Govt
approved bonds.

She does not have any income in the US. Her only other
income in India for 2003 is about $1,500 in interest. She
did not bring the home sale proceeds to US since she
reinvested all of it in India.

Thanks for your help.
Sincerely,

Laxmi

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laxmiv[at]yahoo.com writes:

- quote -

Assuming "recently" is after the sale of her residence and
assuming that she's not a U.S. citizen, there's no U.S. tax
consequence of this sale.

Phil Marti
Topeka, KS

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My client's mother recently became a U.S. Resident. She has
no income in the U.S. She sold her residence last year (Nov
2003)in India for $625,000. ( I came to know about it
today!) Her basis was about 125k. So she has capital gains
of half a million dollars. She invested this sum (500K) in
some Indian Government bond to avoid taxes in India. They
just filed the Indian tax return (fiscal year ends in March)
I just got a copy of the return. It shows zero taxable
capital gain. She has very little income other than this.

What is the US tax liability? Does she have to report $500K
as capital gains (she is 80 years old and I am concerned
about how she will take it) OR can we use the numbers from
the Indian tax return? In which case there is no need to
file a return.

Since she invested all the proceeds in India, obviously she did not
bring any into the US. I do not know whether it matters.

Please help.

Sincerely.

Laxmi Vidyasagar

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