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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10097
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a Pennsylvania resident client who sold a residential

Customer Question

I have a Pennsylvania resident client who sold a residential property in Canada with a large capital gain. Of course being reported on 1040 and using a tax credit for Canadian tax paid on the sale. What about Pa? Is this a taxable transaction in Pa? And if so, can I use credit for Canadian tax paid again on the Pa tax return. And if I can't take a credit for Canadian tax paid, can I add that tax to the costs basis of the property for Pa tax purposes.
Thank you.
Ron
Submitted: 7 months ago.
Category: Tax
Expert:  Lane replied 7 months ago.
Hi,...As you likely know, PA is not one of the states whose return starts with the Federal AGI:...http://taxes.about.com/od/statetaxes/a/states-based-on-federal-AGI.htm...So we must turn to what PA code defines as the "eight classes of income" that are subject to PA personal income tax....From PA Dept of revenue here: (I'll underline the pertinent part)...https://revenue-pa.custhelp.com/app/answers/detail/a_id/1478/related/1/session/L2F2LzEvdGltZS8xNDYxOTQwNzU5L3NpZC9vVFE2UGVQbQ%3D%3D..."The eight classes of income in which you directly earned, received, or realized the income (loss): (1) Compensation; (2) Interest; (3) Dividends; (4) Net Income (Loss) from the Operation of a Business, Profession, or Farm; (5) Net Gain (Loss) from the Sale, Exchange, or Disposition of Property; (6) Net Income (Loss) from Rents, Royalties, Patents, and Copyrights; (7) Income from Estates or Trusts; (8) Gambling and Lottery Winnings"...But, yes, PA DOES have a credit ... It's called the credit for taxes paid to another state or country...From:http://www.revenue.pa.gov/formsandpublications/papersonalincometaxguide/documents/pitguide_chapter_17.pdf...If a taxpayer claims a credit for taxes paid to other states or countries, the taxpayer must complete PA-40 Schedule G-S or G-L. The taxpayer must also submit with the PA- 40, Individual Income Tax Return a copy of the income tax return (see 61 PA Code §111.5) and W-2(s) filed with the other state or country. The credit will be disallowed if the taxpayer does not provide the tax return from the state listed on PA-40 Schedule GS or G-L, Line 1. Individual taxpayers submitting PA-40 Schedule G-S or G-L must also submit PA-40 Schedule G-R;
Expert:  Lane replied 7 months ago.
I hope this has helped....Please let me know if you have any questions at all....If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit")...JustAnswer will not credit me for the time and work until you have rated in this way....Thank you!Lane……I hold a law degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice, to clients on three continents, since 1986.
Expert:  Lane replied 7 months ago.
Did you see my answer?

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