Deemed Disposition on Stocks moved from Canada to US

[dazealex2]

Hello all,

I had a large portfolio of stock in Canada at a brokerage firm that forced me to move my stock elsewhere last year. I was in the US at the time, so I moved it to eTrade (that my company uses as well).

In doing the taxes, since my stocks are now in the US (since last year when I became a Canadian NR). On the final Canadian Tax return for 2014 after non-residency, do I still report them and pay a hefty capital gains tax? Even if I have to, that would still be understandable and fair.

However, since the stocks are in the US, and if I *actually* sell them I would get hit with taxes yet again, i.e. double taxation. Or is there a treaty, or a cost base adjusting mechanism when I sell them in the US to account for the deemed disposition tax that I already paid in Canada?

Finally, since there will be a lot of tax on the capital gains 80-90K, is there a way to defer it?

I'm very confused. In fact, I think I made a blunder in moving them to the US. But at the time, no Canadian brokerage would let me open up an account from the US.

Please advise.

Thanks,

daze

[nelsona]

There is a IRS rev proc 2010-19 that deals with this. Essentially, IRS will recognize the deemed disposition when you eventually sell, and you will pay tax to IRS only on the post-arrival gains.

If you read the CRA forms dealing with deemed disposition, they explain the ways you can defer paying the tax.

You are not allowed to have a CDn brokerage acct when living in US.
Moving them to US was a non-event. Where it gets tricky is if your have Cdn mutual, as you need to sell these when leaving.

[dazealex2]

nelsona, thank you so much for answering. I can't thank you enough!

All the best.

And keep up the excellent work. I hope my question, and your answer gives someone a good night's sleep. I know I've lost hair, weight, and sleep over this complexity since I stepped foot outside Canada down South.

daze