Hi Nelsona,
Excellent observation - you are correct. CRA's first advice I received was contradicted by a subsequent agent (and tax specialist), who said I will have to file a deemed disposition. They say the value of the shares is something that I have to propose and they cannot provide guidance on ...
Search found 2 matches
- Thu Mar 24, 2016 2:39 pm
- Forum: Canada / United States Tax & Accounting
- Topic: IRS Treatment of Shares in a Private Company
- Replies: 3
- Views: 1925
- Tue Mar 22, 2016 11:49 am
- Forum: Canada / United States Tax & Accounting
- Topic: IRS Treatment of Shares in a Private Company
- Replies: 3
- Views: 1925
IRS Treatment of Shares in a Private Company
Hi All,
I`m hoping that someone can provide some guidance on my situation as I`m about to move to the US on a green card. I do not plan to be a permanent US resident; my American spouse and daughter will return with my to Canada in a few years.
My question relates to my owning my own company registered in Ontario. I am the sole shareholder. I am wondering how IRS would view and tax the Canadian company and its assets once I am in the US. From CRA’s perspective, I’ve understood that the shares I own in a Canadian company will not be “taxable Canadian property†subject to a deemed disposition because they do not meet the CRA requirements for that (i.e., they are non-traded and less than 50% of the value is from “real or immovable propertyâ€, forestry, etc.). All of the value of the shares is from the cash held by the company, and a CRA agent said that doesn’t count as “real or immovable propertyâ€. So I’ll be fine when I leave Canada. However, I’m unsure whether the IRS would want to tax my assets in the company, such as upon my eventual exit from the US. I would strongly prefer not to have to distribute the company’s cash to me before moving to the US, given the tax I’d have to pay in Canada if I did so.
Anyone guidance would be greatly appreciated!
I`m hoping that someone can provide some guidance on my situation as I`m about to move to the US on a green card. I do not plan to be a permanent US resident; my American spouse and daughter will return with my to Canada in a few years.
My question relates to my owning my own company registered in Ontario. I am the sole shareholder. I am wondering how IRS would view and tax the Canadian company and its assets once I am in the US. From CRA’s perspective, I’ve understood that the shares I own in a Canadian company will not be “taxable Canadian property†subject to a deemed disposition because they do not meet the CRA requirements for that (i.e., they are non-traded and less than 50% of the value is from “real or immovable propertyâ€, forestry, etc.). All of the value of the shares is from the cash held by the company, and a CRA agent said that doesn’t count as “real or immovable propertyâ€. So I’ll be fine when I leave Canada. However, I’m unsure whether the IRS would want to tax my assets in the company, such as upon my eventual exit from the US. I would strongly prefer not to have to distribute the company’s cash to me before moving to the US, given the tax I’d have to pay in Canada if I did so.
Anyone guidance would be greatly appreciated!