Cap gains & stock options for dual citizen living in Can

Rip VanWinkler · Post by **Rip VanWinkler** » Sat Mar 29, 2008 6:40 pm

I have read some of your forum topics on this issue but would like some clarification as the replies here differ from what I have read elsewhere.

I am a dual US and Cdn citizen. I have been living in Canada and working for a Cdn company for many years. I have been filing 1040s as MFS using the FEIE for many years. I have also been reporting capital gains & losses on my Cdn stock trades to IRS. I do not have any US based investments. If it matters, my wife is a Cdn citizen only and does not file US returns.

1. Are my capital gains and losses on publicly traded stocks on Cdn exchanges exempt from US capital gains? Other sites I have read say no, and IRS pubs (Pub 54, Pub 525, Tax Tip 2008-37) state that US citizens must report all worldwide income including cap gains, with no mention of exemption. I have read your replies to others in similar situations, saying they can file form 8833 and cite Article XIII to exempt their cap gains. From what I found, Art XIII applies to personal property; does it apply to stocks also?

2. Do I file one 8833 per trade, per account, or just a single form for the whole year? Should cap losses be reported on the 8833 also?

3. I currently have a capital loss surplus on file with IRS for both long term and short term. A portion of cap loss (up to $1500 for MFS) can be applied against other income. If I switch to using 8833 exemptions for cap gains & losses, can I continue to use up cap losses on record against future income? This could be helpful in retirement years when FEIE no longer applies. Can I flip year to year between filing Schedule D cap gains & losses and using 8833 exemptions?

4. I occasionally exercise employee stock options from my employer. This stock only trades on a Cdn exchange. Would these exercises and subsequent sales be treated the same as other cap gains on an 8833?

BTW, cudos to you for offering this service. It has been a great help and education.

nelsona · Post by **nelsona** » Sat Mar 29, 2008 6:59 pm

1. The exclusion for cap gains does NOT apply to US citizens. I'm not sure where you read that on this board, but if you point out the thread I'll, certainly add to it to remove any douby.

Non-US citizens can use XIII(4) -- not 3 -- to their advantage when leaving US. Citizens cannot.

the rest of your points are moot.

Rip VanWinkler · Post by **Rip VanWinkler** » Sat Mar 29, 2008 8:40 pm

I found a series of posts from Mar 23, 2004 discussing cap gains for US citizens resident in Canada on what I assumed was an earlier version of this forum. This site is run by a lawyer named Grasmick, but contains a tax forum with the Serbinski moniker. My apologies if I got it wrong.

http://www.grasmick.com/board/?topic=topic2&msg=9650

nelsona · Post by **nelsona** » Mon Mar 31, 2008 5:16 am

The current info is more accurate. The saving clause, which excludes many treaty provisions for US citizens had not been taken into consideration.