calculating long term/short term capital gains

[Ed]

Hi,

I have two questions regarding the stocks of an american company.

1. I purchased stocks of an American company using Canadian dollars from July 2003 until Jan 2005. All that time I was in Canada. I moved to the US in Jan of 2010. So I have held the shares for more than 2 years to use the long term capital gains. However, I have been in the US for only 1 year. Can I claim long term capital gains on the stocks based on the number of years that I have held or will IRS consider this as short term capital gains considering my residency in the US?

2. Like I mentioned, I purchased those shares using Canadian dollars while in Canada. During those period (July 03-jan05), the currency fluctuated between .72 cents and .83 cents US to a looney. I averaged out to be 0.76267. If I sell my stocks when at .96267, I have lost 26% due to currency fluctuation on the stocks. Can this 26% be factored into (offsetting capital gains - whether short term or long term) when I file my taxes?

You response is much appreciated.

Ed

[nelsona]

Well, first off, since you left canada, you are supposed to pay deemed disposition tax to CRA. You will use this new value as your basis for future US tax.

[Ed]

Hi Nelsona,

I was not referring to the taxes to CRA. I was wondering how would I pay capital gains to IRS?

Ed

[nelsona]

I did answer your question, plus more information that seemed to elude your grasp.
You will pay tax to IRS based on the deemed disposition tax you first pay to CRA.

But, in general, since you purchased US shares in US company, they were valued in USD, no? Then there is no currency conversion to be done for IRS.
It is for CRA that you will need tomake conversions.

And, yes, even using deemed disposition of jan 2010, these will be considered long-term.

So, focus more on your CRA obligations, we''ll worry about IRS later.