Serbinski Accounting Firms

Thank you. Dual citizen, resident in Canada.

Apparently there was legislation in August 2010 relating to preparing 1116s re: certain income resourced by treaty.

OAS/CPP --for 2010 I reported this on line 20a Soc. Sec benefits and reported the taxable amount as zero. I excluded a prorata amount of my Canadian taxes when determining my FTC .I ...

Yikes! I am in the same boat. I am a dual citizen resident in Canada. I have always reported my Canadian Company pension as passive income. Unfortunately just last month I threw out my old US tax books but I am almost certain at one time in the 1116 instructions it listed "pensions" as passive ...

guess I'm replying to the reply. Is it difficult to get the private letter ruling. I was planning on filing 1291s on mutual funds/etfs purchased as long ago as 2004. This gets pretty expensive. If one gets the ruling do they also have to refile amended returns for all those years?

That might hold ...

Thank you for the replies. I guess I was not explaining myself well. It was the 8621 that was forcing me to allocate an FTC to a particular sale to partially offset the 35% additional tax I was being charged. I was not having trouble determining my overall FTC (for simplicity 100% of my income is ...

Apologies for my continued confusion. I'm retired and 100% of my income is passive so my passive income remains 100% whether or not I halve the capital gain. I have no problem generally with the 1116....but a bit with the 8621.

If I understand correctily I guess what I am supposed to do to ...

I am unsure of the calculation of FTCs for the form 8621 in cases where I have sold a mutual fund (1291 treatment).

My effective Cdn Tax Rate on income (all passive) is 22%.
When determining the FTC for the gain on sale of a 1291 fund....do I use the 22% effective rate times the gain for the FTC ...

nelsona was CdnAmerican correct in using the y/e book value as his adjusted basis. I thought the first year you used mark to market you had to first give 1291 treatment to the fund to account for prior years holdings.

thank you for your reply. I too would like an official pronouncement since this can get pretty expensive for those of us who unknowingly have been holding Cdn mutual funds and ETFs.

I am preparing 2011 return as if 1298(f) doesn't apply since I fear the IRS has no problem with retroactive ...

Re: point (a. Are you sure the irs regards Canadian mutual funds as falling under 1298(f). I was of the understanding that they are considering them as having been PFICs all along and thus require PFIC treatment. For example

(I am a dual US Cdn citizen living in Canada continually for 40 years ...

My understanding is yes. I did it last year for the first time. Then in 2011 sold most of my mutual funds so will file 8621s this year treating them as 1291 funds on the form which will result in an unwanted and somewhat sizable for me tax hit.

Just a comment ... it isn't fair. Nothing fair about it. Actually if this is your sons first investment at least he can do mark to market and avoid the more punitive taxation albeit still being taxed on unrealized gains (pay as you go) and no capital gains treatment.

A bigger problem is for those ...

I'm not familiar with 1298(f) or did not think it applied. I am a cdn resident, Cdn/us citizen. I thought it was not that I wasn't required to file 8621s, I thought it was simply that I didn't have a clue that a Canadian mutual fund was anything but a mutual fund, not a PFIC. I have been spending ...

Is there any exemption re: the RRSP? Somewhere I heard about a $600,000 exemption re: gains but maybe that excludes RRSP gains.

Also what a a pension from a Corporate Pension plan? This is not something you can cash in or opt out of?

I think I finally understand PFIC reporting under the mark to market election and would plan to make that election at least until I manage to sell my mutual funds, probably in 2011. But mechanically how does one initiate 8621 reporting starting with this years return (I have extended till Octobler ...