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

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
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 »

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: 18314
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 »

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. Please Search previous posts, no situation is unique as you might think. 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 »

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: 18314
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 »

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. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Post Reply