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To: 'taxman@centa.com'
Subject: Please Help... Importance: High I found your website and found it very interesting. I trying to figure out my fathers 2002 taxes and need a bit off assistance - hopefully you have a book or something out there I can purchase. He sold "Personal Use Property" in Hawaii in July 2002 that he has owned for over 20 years. They withheld state tax as well as federal tax. He wants to know how to get it back?? Can you please direct me in the proper direction. I appreciate your help. Sincerely, > XXX XXXXX XXXX, CGA > > Calgary, Alberta > *>
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david ingram replies:
I do not know of any book you can purchase. I have 25 or thirty Q & A's
and a newsletter out there but no book on that exact situation.
Here is what you have to do.
Figure out the ACB of the Property.
What he paid for it
plus any special tax assessments for sewer, etc,
plus any improvements
plus his legal
plus his escrow
plus his title insurance, etc.
Then take his sale price and subtract his legal, the real estate commission,
the title insurance, the termite inspection, the advertising, the fax, the
courier, etc.
The difference is his profit.
He has to file a US federal 1040NR and he will pay a minimum tax of 26% of the
profit to the US federal government. You calculate the AMT of 26% by
following the directions in the 1040NR instruction book VERY carefully and
filling in the 6251 and redefining line 23 of the form 6251.
If they withheld $26,000 federal tax and his profit worked out to exactly
$100,000, he would not get a refund and he would not owe anything.
He then has to file a Hawaii tax return - either a N12 or a N15 (I am writing
this at home and can't remember which is the non-resident version at this
moment).
Hawaii does NOT have an alternative minimum tax as some states (California,
Vermont, etc.) do. You will fill out the (I think) N15 and calculate the
tax.
Hawaii deducts 5% of the gross sale and this usually results in a refund.
You then have to convert the figures to Canadian dollars and report the profit
on line 127.
You would claim the foreign tax on lines 431 and 433 of the Canadian Income tax
return. Note that Canada only allows half of the foreign tax pa\id as a credit
because Canada only taxes half of the gain.
We, of course are ideally suited to prepare these returns for you.
US / Canada / Mexico Income Tax and Working Visa Matters
108-100 Park Royal South West Vancouver, BC, CANADA V7T 1A2
(604) 913-9133 Fax (604) 913-9123
Cell (604) 657-8451 10 AM to 10 PM 7 days a week |
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