Selling raw land in Washington State. - ask

Sent: Tuesday, October 11, 2005 11:02 AM
To: taxman at centa.com; centapede at lists.centa.com
Subject: Selling raw land in Washington State.
Hi David.
I bought a piece of property in Washington State 15 years ago.  I
claimed this property as my $100,000 capital gains excemption in
1994.  I am now selling this property for a substantial gain
(not $100,000) .  Is there any way to avoid paying American taxes
?   What is the best way to proceed with this transaction from a
tax perspective?
 XXXXXXXXs
-----------------------------------------------------
david ingram replies:
The Canadian up to $100,000 exemption in 1994 had no effect on
any property physically in the US.
There was an exemption up to Jan 1, 1985 for the US but you have
e only owned it since 1990 or so.
You will have e to file a 1040NR and pay tax to the US federal
government first.  The sale is also subject to US AMT
(alternative minimum tax) and you must fill in US form 6251 along
with the 1040NR,  Pay particular attention to the instructions
which show you how to put the real estate sale profit on line  30
of the 6251 which changes the obvious calculation. You also write
in RPI (for Real Property interest) to the left of line 30. I
have yet to see a computer tax program that does this properly by
the way.
The best way to proceed is to get  the best price and then do the
return when required.  failure to file a return for a
non-resident sale carries an automatic penalty of $1,000 to
$10,000.
Then you have to recalculate the profit for the Canadian return.
THERE WILL BE A TAXABLE PORTION because it was impossi ble to use
up all the profit on the T664 you filed in 1994.  This was b
because there was still a taxable portion from Feb 25, 2002 to
Feb 22, 2004.
If you need help (and you will) there is not any better place to
take your return.
david
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