Creating 1099-B by hand from T5008 for mutual funds disposal

[godefroy]

Hi,

I'm a dual Canadian & US citizen, with US residency since 2010. In 2018 I sold shares of a mutual fund at a Canadian institution which I had from before my move (note I never filled out any kind of departure tax form). This institution provided me with a T5008 Canadian tax form, which I am looking to convert into a 1099-B (I also have been converting NR4's into 1099-DIV's since the move).

This T5008 form has amounts under "Proceeds of Disposition" and "Cost or Book Value". My understanding is the following:
- "Proceeds of Disposition" is simply the amount I received in 2018 after selling all the shares.
- "Cost or Book Value" is my initial investment + monthly distributions re-invested throughout the years.

I see two options for converting:

A) Convert both "Proceeds of Disposition" and "Cost or Book Value" to USD using the 2018 exchange rate from the IRS.

B) Calculate a new "Cost or Book Value" basis in USD, which is the sum of the initial investment using that year's exchange rate + each monthly re-investment also using the corresponding year's rate. Convert the the "Proceeds of Disposition" using the 2018 exchange rate as in A).

Given the USD/CAD history, going with B) yields a significantly larger loss (3x, ~$10k). Is it the right approach?

Note: I would use yearly exchange rates as listed here: https://www.irs.gov/individuals/interna ... ange-rates

[nelsona]

Your cost basis MUST be in the USD rate in effect of each cost: buys, reinvested dividends, etc. The proceeds are determined in USD on that date. There is no strategy here. It is what it is.

[godefroy]

OK, sounds like it's what I described in B, then. I assume it's fine to use the yearly exchange rate for each monthly event, as the IRS does not provide month-by-month values. Thanks.

[nelsona]

For repeated transactions during the year it is fine to use the yearly rate.
However for single or occasional transactions, like a lump-sum from your RRSP, the IRS wants you to use the exchange on that day.