I do this all the time with my holdings that I know I will have forever – the best one I ever did was backing up the truck on McDonalds right after it plummeted due to the mad cow scare a few years ago. That lasted a quarter at best and the stock was right back up there and screaming forward very quickly.

IRS tax topic 856 – foreign tax withholding

http://www.irs.gov/taxtopics/tc856.html

I hadn’t considered using the credit to offset capital gains, since I’ve been planning for a long holding period. It would take the sting out of rebalancing, though.

I read in one of the IRS publications (although I am also not a tax advisor) that a foreign tax credit can be carried forward 11 years, with no small amount of fine print. Given the uncertainty over preferential tax treatment for dividends, maybe looking for more growth stocks is the way to go.

Cheers!

If you have some winners in your portfolio you could sell them and rather than selling winners and losers to offset you could just sell the winners and end up with a gain for the year.

If the gains were enough to drive a tax obligation at year end (can’t know this it depends on the trustees total income) then the credits could be applied there, I believe, to offset the total tax obligation.

I don’t know if it can be carried forward or not. Maybe this is a question that is asked or answered at the Fairmark tax forum there is a link on the web site.

Thanks for the comments I usually get nothing but spam :<