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Author: edppas Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121095  
Subject: Capital gains tax for non-resident aliens Date: 9/25/2000 5:50 PM
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Sorry,

I know that this has been discussed before and here I go bringing it up again.

But I have read all the posts I could find and the related IRS publications as well (although they were a lot less enjoyable than your "posts"). And I am non the wiser(Oops, I suppose that should have been, I am still not foolish enough).

Previous posts to this board seem to state quite categorically that non-resident aliens do not have to pay capital gains tax - Great, since I am one.

But when I read "Publication 505" from the IRS, I got confused again. In table 1 part 2 of said publication
there is a row that says "Other countries", and in the Capital Gains column it says 30%.

I presume that "Other Countries" mean all countries not in the table which is >95% of all countries in the world, and since I live in one of those, Panama, this would seem to apply to me.

Does anyone know what goes?

Best regards
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Author: criser Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 40312 of 121095
Subject: Re: Capital gains tax for non-resident aliens Date: 9/25/2000 11:46 PM
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Previous posts to this board seem to state quite categorically that non-resident aliens do not have to pay capital gains tax

If you're talking about US stocks in your brokerage account, that is the case. No capital gains tax.

If you're talking about capital assets other than publicly traded stock, the story may be different depending on the type of income, the type of asset, and the location of the asset.

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Author: edppas Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 40313 of 121095
Subject: Re: Capital gains tax for non-resident aliens Date: 9/26/2000 9:39 AM
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Thank for your reply.
I am talking about US stocks in my brokerage account.

I will read through the IRS publications again, and try to find where that distinction is made.

I do believe you are right but I wouldn't be able to hold you responsible if you were wrong. And I doubt that the IRS would accept posts from this Board as justification for my not paying tax.

I wish that the IRS could be as concise and as clear as you when they write their publications.

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Author: criser Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 40326 of 121095
Subject: Re: Capital gains tax for non-resident aliens Date: 9/26/2000 2:57 PM
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U.S. source capital gain, which is not effectively connected with a US trade or business ("effectively connected" is a special tax term generally meaning that it the assets are used in an active US trade or business - sale of stock in an individual portfolio is not "effectively connected" with a US trade or business), that is realized by a nonresident alien from the sale or exchange of a capital asset is not subject to U.S. tax. unless it is:

(1) capital gain from what would ordinarily be a capital asset which is considered under the Internal Revenue Code as gain from an asset that is not a capital asset, if such gain is treated as "fixed or determinable income" under the Internal Revenue Code;
(2) gain from the sale or exchange of a U.S. real property interest; or
(3) gain realized by a nonresident alien during a taxable year in which he is present in this country for an aggregate of 183 days or more.

All of this can be found in Section 871 of the Internal Revenue Code and the associated Regs. The "effectively connected" stuff is in Section 864 and the Regs for 864.

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Author: edppas Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 40327 of 121095
Subject: Re: Capital gains tax for non-resident aliens Date: 9/26/2000 3:24 PM
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Thank you very much, criser.

That certainly helps me.

I am impressed, I am not used to this qulity of response from other(non TMF) finanical discussion boards, usually you get a bunch of responses most of which are mere guesses.

Best regards
edppas(Recent convert)


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