Hi all,
I live in Japan, subject to worldwide taxation for both Japan and US. Sold stocks in US with capital gains in 2023. Here's how I think this should work, based also on another thread here recently:
I pay capital gains tax on these in Japan.
I use it to offset the capital gains tax in US.
However, my US accountant seems to classify these as US-sourced given they come from 1099-B, consequently making it impossible to use Japan-paid tax to offset these. When asked, he claims I should use these to offset the taxes on my Japanese tax return. Symmetrically, my JP tax accountant claims I can't use the US capital gains tax for that purpose here, and I should use JP capital gains tax to offset the US ones.
Needless to say, one of these parties must be in error. Reading the tax treaty, I don't see why these could be considered US-sourced income just because these are US stocks. In fact, I even see this as an explicit example on page 20 of IRS document here https://www.irs.gov/pub/int_practice_units/ftc_c_10_02_05.pdf .
So my take is my US accountant is wrong. If someone knows other authoritative source to that extent I could use it to concinve them, or if I am wrong, it would be great to know.
Thank you so much!
by kujira23
