Late Foreign Tax Refund

[Larry Israel]

I just got a foreign tax refund for 2010. It would not affect my US tax,
as even with the refund my foreign tax is more than I was allowed to
deduct on my Form 1116. It would, of course, affect my carry-forward
available should I ever be in a position to use it.

How would I treat this on my 2012 return (assuming the rules stay the same)?
Would it be income in 2012? Would I have to file an amended return for 2010?
Should I just note the new amount available for carry-forward in case I would
ever want to use it? Or what?

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[removep...@yahoo.com]

On Jan 31, 11:08 am, VSLA...@weizmann.ac.il (Larry Israel) wrote:

> I just got a foreign tax refund for 2010.  It would not affect my US tax,
> as even with the refund my foreign tax is more than I was allowed to
> deduct on my Form 1116.  It would, of course, affect my carry-forward
> available should I ever be in a position to use it.
>
> How would I treat this on my 2012 return (assuming the rules stay the same)?
> Would it be income in 2012? Would I have to file an amended return for 2010?
> Should I just note the new amount available for carry-forward in case I would
> ever want to use it? Or what?

This is a recovery. I would not file a 1040-X because in general you
would pay back the recovery amount plus interest. In any case, you
said that here the partial FTC refund would not change your tax (ie.
if you had left out this amount of FTC from the original return your
tax would have been the same but the carryover would have been less),
so just reduce the carryover by this amount in your own records. If
all of the refund did make a difference on the original tax return,
then I would report the tax on line 60 (other taxes) with code
"recovery". This is not in the instructions. I don't know if this
would cause problems because you can only take a FTC for tax you are
legally obligated to pay, and the fact that you got a refund means you
were not legally obligated to pay it.