Legal Question in Tax Law in California

Re: Foreign asset

Howdy:

I'm not sure I get the question, but ....

You're required to report all income from all sources, regardless of where on earth the money is earned.

If the property produces income (the only way this question makes sense), then the income is supposed to be reported on your tax return. You'd use Schedule E to the 1040 to report the income and adjust for expenses.

If the property doesn't produce income, then there's nothing to report.

If the property was purchased and sold, then it becomes a capital gains question.

Of course, if the property is overseas and produces income, the IRS never finds out about it by itself. But, that doesn't relieve you of the obligation to report it.

Remember, while overstating expenses can sometimes be explained away, understating income is tax fraud.

Hope this helped.

rkr

Re: Foreign asset

You do not report assets on your income tax return, only income. If he receives income from renting the property or sells it, there could be some capital gains.

However, he could be entitled to foreign tax credits if he also pays taxes in the country where the property is.

You should have a tax professional do the taxes for you.