Capital gain on Cdn-dollar settled US trades

yottaflops · Post by **yottaflops** » Sat Nov 04, 2006 2:56 pm

I am holding some US equities in a Canadian investment account. When I bought them several years ago, the trades were settled in Cdn dollars. Now, I am considering selling them.

One of the stocks I own has appreciated in US dollar amount, but since the Cdn dollar has also appreciated significantly over the last few years, I am actually losing money on the trade. How should I account for this? If I settle my sell in Cdn dollars, can I them claim my trade as a loss?

Thanks in advance!

nelsona · Post by **nelsona** » Sat Nov 04, 2006 5:34 pm

You determine your capital gain (or loss0, for US tax purposes, based on the cost (in US$ valued when you purchased) and the proceeds from the sale (in US$ valued the day you sold).

So, no matter how the transaction was 'settled' you are going to have a gain in US$ on your US tax return.

If you are living in Canada, of course, then your trade would be reported in the corresponding Cdn$ values, and you would have a loss.

nelsona · Post by **nelsona** » Sat Nov 04, 2006 5:37 pm

Don't forget too, that if you moved out of Canada before selling these stocks, you must report a deemed sale on the day you left on your final Cdn return, and you then have the option of using this value as your cost for US purposes.

yottaflops · Post by **yottaflops** » Sat Nov 04, 2006 9:03 pm

Thanks, Nelson.

About your second point... I did report a deemed sale when I left Canada. You said I have the "option" of using this value as my cost. I assume this means I don't have to? (since this value is lower than the original price at which I bought...)

Also, from your first point, I assume that if I were to use the deemed sale value, it would be the US$ price on the day of the deemed sale?

Thanks again.

nelsona · Post by **nelsona** » Sun Nov 05, 2006 11:43 pm

Yes on both counts.