Wire Transfer from my foreign account

[tigey 10]

I have been a resident for around a year now and my wife and I file taxes jointly. I left a small parcel of land in my home country before I moved to the USA. I just had a relator sell the land and will now wire me the money to my US bank account. The sum should be around $30,000. I did not make money on the sale of this land, in fact when you factor in the legal fees and the interest I was paying on the loan before, I lost about $5000. But I need the money here in the USA now, so I went ahead with the sale. Anyway, the realor has an escrow account which he will have depost into my Wells Fargo account via wire transfer. Do I need to claim this to the IRS? Do I need to pay tax on this amount?

[CarlosAndSveta 808]

I have been a resident for around a year now and my wife and I file taxes jointly. I left a small parcel of land in my home country before I moved to the USA. I just had a relator sell the land and will now wire me the money to my US bank account. The sum should be around $30,000. I did not make money on the sale of this land, in fact when you factor in the legal fees and the interest I was paying on the loan before, I lost about $5000. But I need the money here in the USA now, so I went ahead with the sale. Anyway, the realor has an escrow account which he will have depost into my Wells Fargo account via wire transfer. Do I need to claim this to the IRS? Do I need to pay tax on this amount?

Whether or not you report the loss depends on the use of land. If you were holding the land for personal use then the loss you sustained is not deductible for tax purposes. If the land was investment property then you can deduct the loss on your tax return. Here is a link to an IRS publication dealing with the Sale of assets: http://www.irs.gov/pub/irs-pdf/p544.pdf Read it and hopefully it will answer your question.

[tigey 10]

I honestly dont care about the deduct, I just dont want them to see 30K in my account and charge me extra tax. I was going to use the land to build a home before I met my wife and moved. So it was for personal purposes.

[CarlosAndSveta 808]

I honestly dont care about the deduct, I just dont want them to see 30K in my account and charge me extra tax. I was going to use the land to build a home before I met my wife and moved. So it was for personal purposes.

In your case you only need to report the sale of the land on your return if you receive a Form 1099-S. Since the land was located in Belize I doubt you will get a Form 1099-S from the Real Estate Agent. Read the middle column of page 36 of Publication 544.

[tigey 10]

No. i wont get that form from my realter. I can make a request and ask him to send it. But if he doesnt, what will happen? Will the bank report the deposit to the IRS and will I get in trouble for not telling them what its for?

[CarlosAndSveta 808]

No. i wont get that form from my realter. I can make a request and ask him to send it. But if he doesnt, what will happen? Will the bank report the deposit to the IRS and will I get in trouble for not telling them what its for?

Your Realtor is not required to prepare a Form 1099-S since the property is not located in the U.S. Since that is the case you don't have to report the sale of the land on your return.

[aaron2020 11,651]

No. i wont get that form from my realter. I can make a request and ask him to send it. But if he doesnt, what will happen? Will the bank report the deposit to the IRS and will I get in trouble for not telling them what its for?

As an LPR, the US taxes you on your worldwide income.

The $30,000 must be reported on your US tax return. You can deduct the "basis" of the property to determine your gain or loss. Since you claim that the "basis" is more than what you received for the land, then you have a loss that you can deduct against your capital gains and/or regular income (limited to $3000 of losses).

The US will assume a basis of "0" unless you have proof of your basis.

The bank will report any transactions over $10,000 to the US government.

Of course you will get in trouble if you "don't tell" because it's tax evasion.

It's mandatory that you report the sale on your US tax return.

[CarlosAndSveta 808]

As an LPR, the US taxes you on your worldwide income.

The $30,000 must be reported on your US tax return. You can deduct the "basis" of the property to determine your gain or loss. Since you claim that the "basis" is more than what you received for the land, then you have a loss that you can deduct against your capital gains and/or regular income (limited to $3000 of losses).

The US will assume a basis of "0" unless you have proof of your basis.

The bank will report any transactions over $10,000 to the US government.

Of course you will get in trouble if you "don't tell" because it's tax evasion.

It's mandatory that you report the sale on your US tax return.

He already stated that the land was held for personal use. A realized loss on personal use property is not deductible unless it is the result of casualty or theft. Since the loss is not deductible he doesn't have to report it on his return.

[aaron2020 11,651]

He already stated that the land was held for personal use. A realized loss on personal use property is not deductible unless it is the result of casualty or theft. Since the loss is not deductible he doesn't have to report it on his return.

OP described it as a "parcel of land."

If there was a personal residence on it and he lived there and conducted no business, then I would agree with you. However, "personal use" in the colloquial nature is not the same as "personal use" for tax purposes.

If this was raw land or land use to farm and OP did not have a personal residence on it, then it's a capital asset.

There is also mixed usage. For example, my home is used as a residence and for my business. I cannot take a deduction for my personal use of the home as a residence, but I can damn take a deduction for the rooms that I use for my business.

Just because someone states that a "parcel of land" was for "personal use" does not make it so for tax purposes.

Without knowing the buildings or activities on the land (or lack of buildings and activities), neither you or I know if the land loss is deducible.

[CarlosAndSveta 808]

OP described it as a "parcel of land."

If there was a personal residence on it and he lived there and conducted no business, then I would agree with you. However, "personal use" in the colloquial nature is not the same as "personal use" for tax purposes.

If this was raw land or land use to farm and OP did not have a personal residence on it, then it's a capital asset.

There is also mixed usage. For example, my home is used as a residence and for my business. I cannot take a deduction for my personal use of the home as a residence, but I can damn take a deduction for the rooms that I use for my business.

Just because someone states that a "parcel of land" was for "personal use" does not make it so for tax purposes.

Without knowing the buildings or activities on the land (or lack of buildings and activities), neither you or I know if the land loss is deducible.

He specifically stated that he bought the parcel of land to build his personal residence. Therefore it is personal use property which means that the capital loss is not deductible and he doesn't have to report it on his tax return.

[tigey 10]

He specifically stated that he bought the parcel of land to build his personal residence. Therefore it is personal use property which means that the capital loss is not deductible and he doesn't have to report it on his tax return.

Correct, I was living with my parents, the purpose if the land purchase was to build my primary residence. There are no residential developement communities like here in the US, typically a home is either handed down from parents, or you buy a piece of land and build yourself.This is the most common procedure for new homeowners since land is plentiful but infrastructure/prebuilt housing is not. Then I met my wife, went through the K1-Green Card Process and moved to the USA. I decided to sell the land in order to facilitate my new life here.

Edited April 9, 2014 by tigey

[tigey 10]

The money is in an escrow account and will be deposted directlyn into my checking acount. There will be no supporting paperwork. Since its over 10K, Wells Fargo will report to the IRS, I guess my concern is that this will be an issue when filing taxes if its not claimed. Should I send them a letter stating what the money came from? Should I show the paperwork from when I sold it? Where do I send it. My concern is that they will come back and ask me about it and charge late fees or some non report fee or something like that

[CarlosAndSveta 808]

The money is in an escrow account and will be deposted directlyn into my checking acount. There will be no supporting paperwork. Since its over 10K, Wells Fargo will report to the IRS, I guess my concern is that this will be an issue when filing taxes if its not claimed. Should I send them a letter stating what the money came from? Should I show the paperwork from when I sold it? Where do I send it. My concern is that they will come back and ask me about it and charge late fees or some non report fee or something like that

I don't think there is any reporting requirement on your part for receiving the $30,000. The only thing you need to do is to make sure you keep the documentation about the sale of the land and (this is the most important part) you keep documentation of the purchase price for the land. If it will make you feel better you can attach a statement to your return disclosing the sale and explaining that it resulted in a non-deductible loss. Of course this means that you can't file your return electronically, you will have to mail in a paper return.