Has anyone considered using a 1031 exchange instead? If the property is eventually going to be an investment property, you might be able to defer those capital gains entirely!

One important consideration that hasn't been fully explored - if you're planning to live in this property as your primary residence initially, you should also think about the capital gains exclusion for primary residences down the road. If you live there for at least 2 of the next 5 years, you could potentially exclude up to $250k (single) or $500k (married) of capital gains when you eventually sell the property. This could be a powerful strategy: realize the stock gains now (ideally split across tax years as others suggested), use that money to buy the property, live there as your primary residence for the required period, then potentially sell tax-free later. The timing requirements are strict though - you need to own AND live in the home for at least 2 years out of a 5-year period. Also, since you mentioned considering this as an investment property eventually, be aware that if you convert it from personal residence to rental property, you'll need to deal with depreciation recapture when you sell, which is taxed at up to 25%. But the primary residence exclusion could still apply to the appreciation portion if you meet the use requirements.

Just want to mention from personal experience - even though you technically don't need to use the 1098-T as a non-resident, I STRONGLY recommend keeping a copy of it with your tax records. The IRS occasionally sends verification requests, and having documentation of your tuition and scholarship amounts has saved me a lot of trouble in the past. Better safe than sorry!

As someone who went through this exact same confusion last year, I completely understand your frustration! The key thing to remember is that as a non-resident filing Form 1040-NR, you're not eligible for education credits like the American Opportunity Credit, which is the main reason US residents use Form 1098-T. However, you still need to report any taxable scholarship income. Since your Box 5 amount exceeds Box 1, you likely have some taxable scholarship income - typically the portion used for living expenses rather than qualified educational expenses like tuition and required fees. My advice would be to: 1. Calculate how much of your scholarship went toward non-qualified expenses (room, board, personal expenses) 2. Check if there's a tax treaty between Nigeria and the US that might provide exemptions for students 3. Keep all your documentation even if you don't directly use the 1098-T on your return The Nigeria-US tax treaty does have provisions for students, so definitely look into that. You might also want to consult your university's international student services - many offer free tax help during filing season and they're familiar with these specific situations for non-residents.

my transcript updated this morning! shows 846 code for 2/28

Thanks for sharing this update! I've been refreshing my transcript every morning hoping to see something change. Filed on January 22nd with EITC and ACTC, so I'm definitely in the PATH Act hold. It's reassuring to finally have concrete dates instead of the usual "by the end of February" language they typically use. The February 17th lift date gives me hope that we might start seeing transcript updates that week, and knowing that most refunds should be funded by February 28th helps me plan better. I know the wait is frustrating but at least we're not in limbo anymore wondering when this will end. Hopefully everyone waiting sees their 846 codes pop up soon after the 17th!

One thing nobody mentioned yet - check if your parents did any partial surrenders or took policy loans over the years. If they did, that can affect the cost basis calculation. My dad had taken some loans against his policy in the past, and when he finally surrendered it, that complicated the tax treatment. Basically, any previous tax-free distributions reduce the cost basis, which can make more of the final surrender taxable.

Just to add some perspective - I went through this with my grandfather's policy last year. We discovered that he had significantly OVERPAID taxes because the 1099 didn't properly account for his basis. We had to file an amended return (Form 1040X) to correct it and get about $6,000 refunded. The key was getting proper documentation from the insurance company showing all premiums paid over the life of the policy (thankfully they had good records).

I learned the hard way about the passive activity loss rules and depreciation. Make sure you're keeping detailed records of disallowed losses! When I sold my rental last year, I couldn't find my records showing which depreciation had been disallowed vs. allowed. The IRS assumed ALL scheduled depreciation had been taken, even though some was disallowed. Had to hire a tax pro to reconstruct 7 years of depreciation schedules and passive loss worksheets. Cost me $1,200 just for that service. Could have avoided it with better record keeping.

Great question about tracking disallowed depreciation! I've been using TaxAct for my rental properties and it has a pretty decent depreciation worksheet that carries forward the disallowed amounts from year to year. It shows both the calculated depreciation and what was actually allowed each year. But honestly, I also keep a separate Excel spreadsheet as backup. I track: (1) the full MACRS depreciation amount, (2) business use percentage each year, (3) calculated depreciation after business use adjustment, (4) amount actually allowed after passive loss rules, and (5) cumulative disallowed amounts carried forward. The key is making sure your tax software and your manual tracking agree each year. When you eventually sell, you'll need to prove which depreciation was actually taken vs. just calculated. The IRS doesn't care that your software "calculated" depreciation if the passive loss rules prevented you from actually taking it. Also recommend printing or saving PDFs of your depreciation schedules and Form 8582 (passive loss worksheet) each year. Digital files can get corrupted or lost, but you'll definitely need this documentation later!