Joint stock account in Canada after moving to the US

eiyou · Post by **eiyou** » Tue Nov 30, 2010 10:04 pm

I have a JOINT ACCOUNT (stock) with my dad (macket value US$10k) in US account of Canadian Broker in Canada. The gain is about US$3k.

I moved to the U.S. last year. But my dad is still resident of Canada. I am not trading and just want to keep it. I did not close the account and just leave it along since I think my dad is still resident of Canada?

Can I still keep my name in this account even I am not resident of Canada?
If not, what action should I take to correct this?

Thanks,

Eiyou

nelsona · Post by **nelsona** » Wed Dec 01, 2010 5:10 am

If it was your account alone, you would need to closee it and transfer your holdings to a US broker.
However, since your father is still in Canada, the account can stay open, however only he is permitted to initiate any trades or purchases.

You of course are required to report the deemed dipsosition of your share of the account on your departure return, and are required to report your income to IRS as well.

eiyou · Post by **eiyou** » Wed Dec 01, 2010 10:39 am

Thanks for the quick reply.

This leads me some other questions,

How to generally determine what my share is? Nowhere defines this. Can I just say the most are my father's?
The money is actually from my father. That's why I did not realize I had to disposition the stock account when I moved. How do I correct this if it is really necessary.

Thanks,

Eiyou

nelsona · Post by **nelsona** » Wed Dec 01, 2010 10:54 am

Well, how have you been reporting the income earned so far?
Who has been reporting the gains and losses on their return so far?

nelsona · Post by **nelsona** » Wed Dec 01, 2010 10:57 am

And it is not true that "nowhere defines this". The principle is that assets are divided based on the amount each initially contributed to the account.

If none of the money is yours, why is a joint account? If the money was given to you as a gift, why is your father;s name on the account?

Beause you have left canada, you should simply remove your name from the account.

eiyou · Post by **eiyou** » Wed Dec 01, 2010 11:39 am

We have never reported anything so far because we bought and held it until now.

We thought Joint Account might be more flexible. Now things truned out opposite way and getting complicated.

So the bottom line is how to fix this. Do I have to file tax return this year to just disposition this.

Thanks,

Eiyou

nelsona · Post by **nelsona** » Wed Dec 01, 2010 11:50 am

if all the funds in the account are your father's, then it is your father's account, take your name off. He will deal with any reporting.

If some of the funds are yours (you say they are not), then amend your return for last year and pay the gains based on the day you left. Be aware that this means you will probably have a small fine to pay, both for owed tax and for failure to report your assets. Then take your assets and move them to a US broker.

If all the funds are yours, then -- same as above -- except you should transfer all the funds to US broker and close the account.

I get the feeling you will decide daddy is really the owner of this account.

eiyou · Post by **eiyou** » Wed Dec 01, 2010 12:34 pm

I called the broker and was told that I cannot take my name off. The only option is to close the joint account and open new individual one for my dad. This means I have to sell my stocks, which I really don't want.

What I try to ask is, what is the consequnces if I leave my name in the joint account?

Thanks,

Eiyou

nelsona · Post by **nelsona** » Wed Dec 01, 2010 2:01 pm

As I said, you are forbidden to trade in the account.

Since they are "your" stocks (how you conclude that, I do not know), you are responsible for deemed disposition reporting, tax and penalties, as well as future reporting in US.

What does you father think of all this, since, really, they are his stocks.

nelsona · Post by **nelsona** » Wed Dec 01, 2010 2:03 pm

And I'm pretty sure your father could transfer all these stocks to his own account, without any input from you, and then you could both close the account.

nelsona · Post by **nelsona** » Wed Dec 01, 2010 2:06 pm

In any event, whoever advised you that you and your father should get a joint account should be shot.

eiyou · Post by **eiyou** » Wed Dec 01, 2010 2:28 pm

Thank you very much for your advice and info.

Now I have a bigger picture and I will make decidision.

Have a nice day,

Eiyou

Rickerbucks · Post by **Rickerbucks** » Fri Dec 03, 2010 8:24 pm

I agree with Nelsona. It was not a good idea to open a joint account in the first case. That being said, your father need only open a new account in his own name and then you both sign a "letter of direction" - just written instructions - requesting the assets be moved from the joint account to his sole account. You have to provide a "reason" for doing this but you would just say "...for estate planning purposes". Your brokerage firm should have no rtrouble with doing that.

You would not need to sell them.

Given that it appears that it appears you made no actual contribution of capital to this account I would suggest that your Dad should report 100% of the income / capital gains on this account.

Note: I'm NOT an accountant.