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Inherited a piece of land in Canada and subsequently sold it and the proceeds from sale went to a newly set up bank account in Canada. I understand the forms to fill out for identifying the bank account, but what form(s) are used to report the Capital Gain (or Loss)?


The BIDaWIZ Team's Answer:

Selling a property in Canada is the same for income tax purposes as if the property were in the U.S. In addition, the inheritance rules would be the same in that your basis in the land that you inherit is stepped up to the date of death value (IRC Section 1014). In other words, you would use the fair market value at the date of death of the deceased as your cost of the property that you sold, and that should be reported on Schedule D. You need to convert the transaction to U.S. dollars at the time of the death and then the eventual sale and report it on a Schedule D of your form 1040. This is referenced in IRC Section 1222 and IRS Publication 550. Please note that if you're taxed on the same income in Canada, you can claim a foreign tax credit via form 1116.

The BIDaWIZ Team



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