Hello and thanks for trusting me to help you today. I am a tax adviser with over 20 years of experience.
You will be taxed on the gain that you realize (this is true for federal
). The rate
will depend on your total income
You will be allowed to claim a credit for the tax paid in Germany.Form 1116
would be used to claim that credit.
If you receive foreign
sourced capital gains (including long-term capital gains that are taxed in the U.S. at a reduced tax rate, you must adjust the foreign source income that you report on Form 1116, line 1a.
Generally, if the foreign sourced income was taxed at the 15% rate (capital gains rate remember is based on your total income so I am using 15% as example), then you must multiply that foreign sourced income by 0.4286 and include only that amount in your foreign source income on Form 1116, line 1a.
It is a complicated calculation , but, in answer to your question, yes, you can claim a credit for foreign taxes paid.