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Avoiding the Capital Gain Rate Differential Adjustment  

Author:  Seth M.  Colwell, CPA, M.Tax.

Source: Volume 31, Number 01, Fall 2013 , pp.33-38(6)

Journal of Taxation of Investments

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When U.S. citizens or residents have foreign-source income, they face the potential of double taxation. The capital gain rate differential adjustment may limit the foreign tax credit for taxpayers with foreign-source qualified dividends and long-term capital gains. To avoid this limitation, taxpayers and their advisers should utilize the elections under Internal Revenue Code Section 904(j) and Treasury Regulation Section 1.904(b)-1(b)(3).

Keywords: capital gain rate differential; foreign tax credit; foreign source income; qualified dividends; capital gains

Affiliations:  1: University of Texas at Brownsville.

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