My wife (Japanese) and I (U.S.) have a higher level of financial complexity then the typical couple.
We are in our late 40's and interested in returning to Japan for several years, but NOT indefinitely and my wife will likely be subject to the exit tax given the current and projected trajectory of the Yen exchange rate. I would be as well if I became a Permeant Resident.
We are fine with paying Capital Gains Taxes to the Japanese NTA from her investment portfolio ideally with the ability to offset those taxes when she does a Roth Conversion and uses the FTC in the U.S.
However most of her investment Portfolio is held with the her Roth and Traditional IRA's. For a U.S. perspective she can buy and sell within both IRA's without any tax consequences. It only becomes taxable when she does a Roth Conversion or distribution and we will not be doing a distribution while living in Japan.
I am wondering if we can we take phantom capital gains by selling and then rebuying stocks within the IRA's to reset the cost basis in the eyes of the Japanese NTA and pay capital gains taxes to the NTA each year. At the same time do Roth Conversions in the U.S. so that the tax consequence in the U.S. effectively get cancelled out when using the FTC when we file our U.S. taxes.
By upping the cost basis in the eyes of Japanese NTA we can reduce the exit tax when we depart Japan.
I'm just not sure how she would show the NTA that she upped the cost basis as there is no tax form generated when buying and selling within IRA's which is unlike a typical brokerage account.
by Throwaway4567894246