Emigrant return T1161 & T1243

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mm77mm77
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Emigrant return T1161 & T1243

Post by mm77mm77 » Fri May 15, 2020 12:17 pm

I became a US resident on Jan 1st 2019.
The only property I have is my investments (stocks).
I am filing an emigrant return and including forms T1161 & T1243 and reporting my captal gains and losses (deemed disposition) on Schedule 3.
Several of my stocks have had some corporate action during the year and changed their name and number of shares.
Also, I have sold most of them in Dec 2019.
Here are my questions:

1. Do I report the names and number of shares as they were on January 1st or as they were when I sold them ?
My concern is that I would need to use these forms for my US Tax return in order to get step up ACB cost (FMV on departure date) and if I use old names/ share numbers on the forms they won't match with what I sold/own now...
2. Since I have to send a paper return to CRA, do I need to attach any trade confirmations/statements to prove the ACB and FMV of my stocks on date of departure to CRA?
3. If I own US stocks do I report them as Foreign property on the form?
4. Since I didn't realize I became a US resident and didn't advise my Canadian broker about it, I received forms T5008 for the stocks that I sold in Dec 2019. How would I report/attach those forms to my US return for capital gains/losses? I assume I don't need to file a paper return in US and can just submit my 1040 electronically?
5. What do I need to do on US tax return to get the "step up" in ACB to the FMV on departure date?
6. Am I missing anything else, I need to do for my emigrant return?
Thank you!

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Sat May 16, 2020 9:18 pm

Most people don;t move on Jan 1. When did you move to US. That is your departure date for tax purposes.
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mm77mm77
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Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Sat May 16, 2020 10:43 pm

I was in US on F1 visa since 2014. Got married and got my GC in 2019. So, if I understand correctly, as per IRS residency rules, I became US resident on Jan 1st 2019.
https://www.irs.gov/individuals/interna ... y-examples
(please see Example 1)
Thank you!

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Sun May 17, 2020 8:09 am

We are discussing the date when you left Canada. You can choose many dates for filing in US based on several factors. This doesn't impact Canada necessarily. When did you move? from what you say, it sounds more like Dec 31, 2018, your last day of non-residency in US (maybe, you did not marry or get GC on Jan 1).

In any event, whatever date you left canada, THAT is the day you take a snapshot of all your holdings, and report these for departure tax. All that happens after that date is immaterial to CRA. Then you have to deal with IRS for dealings after that, even if you got T forms from Cdn brokers.

The step up/down on ACB is governed by Rev Prov 2010-19. Many posts on dealing with that here.
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mm77mm77
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Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Sun May 17, 2020 12:32 pm

As I mentioned, I left Canada in 2014 and came to US on F1 visa as a student. During this time I only came to Canada for a short visit during school breaks. But according to the CRA rules as a student I was still counted as a factual Canadian resident and filed my Canadian taxes every year.
My F1 status was until end of June 2019. I got married in June 2019 and got my GC in Dec 2019. I didn't go back to Canada to officially "leave" the country because I was not allowed to leave the US while my GC application was pending.
So, I assume since by the treaty it says that once you become a resident of US you become non-resident of Canada - I believe change of residency for me should be Jan 1st, 2019 for both countries. I thought this date has to be the same for both countries.
Or it could be the date I got my GC?
But IRS says:
If you meet both the green card test and the substantial presence test in the same year, your residency starting date is the earlier of:
• The first day you are present in the United States during the year you pass the substantial presence test (01/01/2019)
• The first day you are present in the U.S. as a lawful permanent resident (green card holder) (Dec 2019)

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Mon May 18, 2020 7:04 am

As I said, your date in US is for IRS purposes. Since you ceased F1 in June, you became tax resident then, even without marriage, Sothat would be your date of departure. You could file 1040 with your spouse even if you leived in canada, so that has nothing to do with Cn departure (emigration) date.
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mm77mm77
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Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Mon May 18, 2020 12:45 pm

Thank you for the explanation, I did consider doing it this way at first, but I am a little confused...
I tried consulting tax accountants and they couldn't give me a clear answer on what my date of departure from Canada should be either.

How can I do deemed disposition with FMV as of end of June 2019, if I need this for US Return also and they consider me US resident since Jan 1st 2019, because even though I only meet SPT on July 1st, they consider me resident since the 1st day present in US during the year you meet SPT (i.e. Jan 1st). I thought I have to pick the same date for both countries so that they match?

Here is the what I'm referring to on IRS:
"W meets the substantial presence test on 07-01-2020 (the 183rd day of 2020). W's residency starting date under IRC § 7701(b) is 01-01-2020 (the first day he was present in United States during the calendar year in which he met the substantial presence test)."
This means I was a resident of US for the whole 2019 but then also resident of Canada for first 6 months?? Was I dual resident until end of June?

Could you also please answer my other questions, since I have to mail my return soon.

2. Since I have to send a paper return to CRA, do I need to attach any trade confirmations/statements to prove the ACB and FMV of my stocks on date of departure?
3. If I own US stocks do I report them as Foreign property on the form

Thank you so much! I really appreciate your help!

mm77mm77
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Joined: Fri May 15, 2020 11:42 am

Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Mon May 18, 2020 1:22 pm

Sorry, forgot to add.
The reason I chose Jan 1st, 2019 as the date I became non-resident of Canada is the last line here:

The CRA has indicated that the date you become a non-resident of Canada is the latest of:
● The date you physically leave Canada;
● The date your spouse and dependants leave Canada; or
● The date you become a resident of the new country you are immigrating to.

My reasoning is since I became a resident of US on Jan 1st, 2019 hence I became non-resident of Canada on that same day.
Is that incorrect?

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Tue May 19, 2020 9:05 am

At least now you are thinking about the Cdn departure date. I'll let you finish those thoughts.
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mm77mm77
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Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Tue May 19, 2020 3:30 pm

Yes, of course I was thinking about my departure date from Canada.
I figured it is Jan 1st, 2019 since this is the date I became US resident, hence became non-resident of Canada.
Please correct me if I am wrong.
I am lost here since you think it should be June and I can't figure out how I would proceed with deemed disposition in this case. Any help?
Thank you!

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Thu May 21, 2020 7:11 am

I have given you my opinion.My opinion is the day in june 2019 you lost your F1.
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mj23
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Re: Emigrant return T1161 & T1243

Post by mj23 » Thu May 21, 2020 11:33 am

Thank you, I think it makes sense that it is June.
But what I'm confused about is how would I do my US taxes if I use end of June as the deemed disposition date, but US considers me resident since Jan st 2019?
Wouldn't they want deemed disposition numbers as of Jan 1st instead?

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Thu May 21, 2020 5:16 pm

As I have now said three times, the date you CHOOSE to file asa resisnt in US, may or may not have anything to do with your departure date and departure tax return in canada. They are completely separate decisions and processes. You will file your departure return, and you will file a full-year 1040 with your spouse. You will follow the rules for each. You may have to report some of the same income on both returns. Then you apply, perhaps on bothe returns, for foreign tax credits.
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mm77mm77
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Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Sat May 23, 2020 2:53 am

Thank you for taking the time to help me with this.
What I am trying to figure out now is how to file full year 1040 given that my Canadian departure date is June 30th.

How would I go about filing my RP 10-19, which should provide them with the adjusted cost basis, which supposed to be identical to the deemed disposition on my T1243 & T1161 departure forms?
If I use deemed disposition as of June 30th, would't the IRS balk at that, wouldn't they want the disposition values as of Jan 1st, 2019 (the date I became US resident)?
How do I reconcile those two dates Jan 1st and June 30th? I thought they have to be the same...

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Sat May 23, 2020 11:31 am

If you read RP 19-10, it explains how someone who is taxable in US at the time of deemed disposition (taxable in US). Follow that section.
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