Roth Conversions and unrealized capital gains tax implications

[babytomato]

@twhi Remitting in my case means transferring proceeds from a stock sale to a financial instrument - bank, credit card, etc - that I can use to purchase goods and services in Japan.

Therefore, the only way to avoid remitting income is to not remit any money to Japan in the same year as you had foreign source income (in this case, the rollover)

Are you suggesting that remitting any amount of money - in my case, from stock sales completely unrelated to a Roth Conversion - in the same year that I perform the Roth Conversion will cause the Roth Conversion itself (which is already taxable from the U.S. perspective) to be taxable from the Japan perspective?

 

[twhi]

@babytomato

Remitting in my case means transferring proceeds from a stock sale to a financial instrument - bank, credit card, etc - that I can use to purchase goods and services in Japan.

Incorrect. Remitting means sending money to Japan. Remitting income occurs when sending money from any source, because the remittance is deemed to come from the foreign source income for the purposes of determining taxable income.

Are you suggesting that remitting any amount of money - in my case, from stock sales completely unrelated to a Roth Conversion - in the same year that I perform the Roth Conversion will cause the Roth Conversion itself (which is already taxable from the U.S. perspective) to be taxable from the Japan perspective?

Incorrect. Remitting any amount of money does not suddenly trigger the entire conversion to be taxable. Only the amount of remitted income is taxable. From a practical sense, the amount of remitted income will be the lesser of the amount of money sent to Japan and the amount of foreign source income generated by the rollover (plus any other foreign income).