how to declare capital loss in US tax return?

calgary-alberta · Post by **calgary-alberta** » Tue Jun 21, 2011 11:44 am

I have questions about Canadian mutual fund. Here is the scenario:
1. purchased mutual fund a $1000;
2. exchanged fund a to fund b, fund a value was down to $700 when the exchange happened ;
3. sold mutual fund b and b value was down to $500;

can I declare a total capital loss $500 ($300 when sell fund a and $200 when sell fund b) for Canadian mutual funds? If it is declarable, does it go to form 1040D (capital gain or loss)?

Thanks

nelsona · Post by **nelsona** » Tue Jun 21, 2011 12:05 pm

All capital gains and losses incurred by a US taxpayer are reportable, regardless of where the investment is held -- on schedule D.

Just remember to translate the purchase and sell price to US dollars (the USD value at the time of the purchase and at the time of the sale).

calgary-alberta · Post by **calgary-alberta** » Tue Jun 21, 2011 12:12 pm

Thank you very much!

rlb · Post by **rlb** » Tue Jun 21, 2011 2:50 pm

Don't forget that the IRS considers a Candian mutual fund to be a "Passice Foreign Investment Company" (PFIC). These require filing a form 8621 for each fund for each year you own the fund, and making certain elections as to how to handle the taxes. Since you have a loss on the fund, I don`t think you will suffer the draconian tax treatment applied to those who do have a capital gain. However, you might need to ask for advice - the whole treatment of PFIC`s is more complicated than I can figure out.

nelsona - are things much simpler for him since he has a loss?

calgary-alberta · Post by **calgary-alberta** » Fri Jun 24, 2011 12:50 pm

Thanks rlb. I had loss for non-RRSP mutual fund. Is the form 8621 only filed for the year I sold/exchanged the mutual fund?

calgary-alberta · Post by **calgary-alberta** » Fri Jun 24, 2011 4:09 pm

it looks like it is required to file 8621 for each mutual fund according to this link:

http://www.financialwebring.org/forum/v ... p?p=425002