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

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godefroy
Posts: 6
Joined: Wed Jan 30, 2019 2:13 pm

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

Post by godefroy » Fri Mar 29, 2019 10:35 am

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
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

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

Post by nelsona » Fri Mar 29, 2019 10:55 am

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.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

godefroy
Posts: 6
Joined: Wed Jan 30, 2019 2:13 pm

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

Post by godefroy » Sat Mar 30, 2019 4:21 pm

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
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

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

Post by nelsona » Sat Mar 30, 2019 6:37 pm

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.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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