Discussion:Enter passive foreign tax credit in Lacerte

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Advanced Tax Questions --> Enter passive foreign tax credit in Lacerte
Discussion Forum Index --> Tax Questions --> Enter passive foreign tax credit in Lacerte

Mbnadel (talk\|edits) said:	20 August 2008
In Lacerte, how do I enter a foreign tax credit from rental property where there is depreciation in the US and none in the foreign country so that the credit will be limited by the passive loss rules.

Bjeter (talk|edits) said:

20 August 2008

Step 1: Fill in a profile.

Step 2: Say to yourself, "I am a tax professional and as such don't need to rely on a two-bit outdated software program like Lacerte. I'm going to do myself a favor and switch to a much better tax preparation software package."

Step 3: Relax and enjoy a good single malt scotch.

Mbnadel (talk\|edits) said:	20 August 2008
What is a profile? Which tax software handles this better?

Mbnadel (talk|edits) said:

5 September 2008

I have checked various sources and the answer seems to be:

Foreign tax credits on real estate rentals are not limited by the passive loss rules. The credit is based on the US income from foreign activities. The unused credit is carried forward. When the property sells the foreign tax in the year of sale is generally less than that of the US tax on the same rentals due to the US depreciation taken. The actual tax paid in the year of sale plus the carryover of unused credit is then utilized on the US return.