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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3187
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I am a non-resident of the US but have US real property so

Customer Question

I am a non-resident of the US but have US real property so must file US tax return. I also get 2 K-1s - one has PFIC losses that the statement on back says may not be deductible. The other is an investment fund that buys and sells intellectual property rights and has large gain. Do I have to pay taxes on any of this income? Can I use the losses from the one K-1 against gain from the other?
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.
Welcome to Just Answer. My name is ***** ***** it will be my pleasure to assist you with your tax question today.
Capital gains are tax-exempt for non-residents unless they are effectively connected with a trade or business in the United States during a tax year.
However, the following gains are subject to the 30% (or lower tax treaty) rate:
1. Gains on the disposal of timber, coal or domestic iron ore with a retained economic interest.
2. Gains on contingent payments received from the sale or exchange of patents, copyrights and similar property after Oct. 4, 1966.
3. Gains on certain transfers of all substantial rights to, or an undivided interest in, patents if the transfers were made before Oct. 5, 1966.
4. Gains on the sale or exchange of original issue discount obligations.
You would pay taxes on the gains realized from your intellectual property investment fund.
Unfortunately, a capital loss on a PFIC cannot be used to offset capital gains on other investments.
The following links contain excellent information you may find helpful:
http://www.internationalman.com/articles/more-unofficial-capital-controls-pfic-rules
http://www.bankrate.com/finance/taxes/capital-gain-tax-nonresident-investors.aspx
http://www.invest-faq.com/articles/tax-non-us-nat.html
Please let me know if you require further information or clarification.
Thank you and best regards,
Barb
Expert:  Barbara replied 1 year ago.
Just following up with you to see if you have any other questions or concerns. If so, please come back to me here at your convenience, and I will be happy to assist you. If not, please take a moment to rate my answer since that is the only way I receive credit for answering you and alerts Just Answer to compensate me.Best regards,Barb