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Old 03-20-2013, 11:18 AM
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Reporting Capital Losses with Foreign (Bahamas) Stock Brokerage

I am a US citizen and have an account with a stock brokerage in the Bahamas. My account was never greater than $10k so I do not have to submit the FBAR form, and I did not have to pay any foreign taxes so I am not looking for foreign tax credit. But I have losses that I would like to report because it would reduce my US taxes. Since they are not a US brokerage they do not provide a 1099-B. I have the records of all my transactions so I can fill out a Schedule D for Capital Gains/Losses, but since the IRS doesn't receive anything from the foreign brokerage, how do they know that it is accurate? Do I submit the stock transaction records along with the Schedule D? Since these are just printed from the internet they are not "official" either.



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Old 03-20-2013, 10:01 PM
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“I am a US citizen and have an account with a stock brokerage in the Bahamas. My account was never greater than $10k so I do not have to submit the FBAR form, and I did not have to pay any foreign taxes”======Correct
so I am not looking for foreign tax credit. But I have losses that I would like to report because it would reduce my US taxes. Since they are not a US brokerage they do not provide a 1099-B.”============Correct.
“ I have the records of all my transactions so I can fill out a Schedule D for Capital Gains/Losses, but since the IRS doesn't receive anything from the foreign brokerage, how do they know that it is accurate?”=========I guess once you deducted it on your foreign tax return overseas, then you can’t deduct it again on your US return. when you dispose of your shares in the foreign country and convert the value of FMV of the shares in the foreign currency into $ US by using, I guess, WEIGHTED AVERAGE EXCHANGE VALUE, then it determines if you are subject to LTCL deduction(UNLESS you deduct it on your foreign tax return) to the IRS ;I guess you need to translate those documents/records to English.You need to file Sch D/Form 8949 to report it (the transactions) to the IRS.
“ Do I submit the stock transaction records along with the Schedule D? Since these are just printed from the internet they are not "official" either.”=========As said above. I guess even if they are NOT official(but copies), as long as they are accurate, then, they’d be no problem; you need to contact the IRS for more info in detail; it is up to the IRS.



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Old 03-21-2013, 02:54 PM
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Hi Wnhough, Thanks for your response. I live in the U.S. Using the brokerage in the Bahamas is the same as using a U.S. brokerage such as Etrade or Interactive Brokers, so there is no foreign currency to convert. I am wondering if there's any reason I cannot claim the losses as if it were a U.S. brokerage like Etrade.



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Old 03-21-2013, 02:57 PM
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"I am wondering if there's any reason I cannot claim the losses as if it were a U.S. brokerage like Etrade."=>I do not think so; I guess you need to contact the brokerage for more info



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Old 03-21-2013, 03:02 PM
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You typically use Schedule D/form 8949 to record your capital gains and losses and in the event of a net loss, you are permitted to deduct up to $3,000 of that loss from your ordinary income this year. If you have losses in excess of $3,000, you can indefinitely carry those forward based on a very straight forward schedule; In the event the stock becomes worthless, it’s treated slightly differently but not much differently. First, they treat it as though you sold the stock in the very last day of the year (this is used to figure whether it’s a short or long term capital loss). On Schedule D/ form 8949 you have to mark the stock as worthless and keep records for at least 7 years.



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