Cdn foreign tax credit on US capital gain

[mtnman]

I need help getting my head around this.

I purchased US property in 1976 for $ 41000

I took 1994 Cdn election to report
capital gain bumping up my Cdn ACB to 164,714

I sold the property in 2012 for: 275000

My question is do I claim US foreign tax credits on my Cdn return for US taxes paid on entire gain of $234k (to the max of Cdn tax paid on gain) or on the 1994 adjusted gain of $110,286 ?

Many thanks to those who comment...

[ND]

an importnat note related to your facts but not to your question: Since you purchased US property in 1976, you should be jumping all over the Treaty XIII(9) specail provision that only subjects to tax the gain since 12/31/1984 and wipe off 1976-1984 appreciation from your tax bill. Use more optimal between 12-31-84 value or pro-rated monthly gain.

[mtnman]

Thanks ND...I was not aware of that Article provision.

Assuming I apply that provision, do I apply the US FTC's to Canada for the amount of US tax paid (up to the Cdn tax paid) ?

Your comments are appreciated.

Thanks

[nelsona]

Since you will only be reporting a gain of $110K on your Cdn return, and that will be cut in half for income purposes, $55K is all you can use on your FTC calculation. Remember too that CRA has the nasty policy of only accepting maximum 1/2 of your US tax towards that calculation.