US departure tax Stocks and Mutual on immigating to Canada

[JGCA]

What happens when one leave the US for Canada and you hold mutual funds and US stocks of publicaly traded companies in the US is there a deemed disposition at Market value in the US just like there is in Canada when yuu leave Canada and if not what value does one use as ACB for US tax filings including and Estate tax returns assuming one is a US citizen coming to stay in Canada

[nelsona]

No, there is no deemed disposition when leaving US for eithe US citizens, nor others.

Estate tax is based on FMV at time of death, so value at emigration does not matter.

[JGCA]

Thank you. It seems strange that in Canada you get a bump up in ACB and if you sell those mutual or shares in the future you report only the capital gain in Canada the US does not get any more tax on those gains this is a great way to shelter pregnant gains that you never have to pay tax on to the US.

[nelsona]

You are talking when you move back to canada. That has long been advised here.

[nelsona]

This does not work for US citzens of course, as they reamin taxable in US on all gains.

[JGCA]

Once you come to Canada and sell the US Stocks you owned when you left the US unless these gains were from US source income or business income from the US it was my understanding that they are no longer taxed by THe US only Canada has the right under treaty to tax capital gains once you are resident in Canada, I was not implying that one moves back to the US but remains in Canada, from what I read here the capital gains would not be taed at all on the stocks in the US .

[nelsona]

Incorrect -- if you are US citizen.

The treaty doesn't apply for US citizens. You will always report all income on a 1040 every year, and then apply exclusions, crdits and deductions.

[nelsona]

For non-US citizens, particularly those going to canada, where deemed acquisition rules are applied, this feature can be a great boon.

Say, you buy ABC at $1 and move to canada when it is worth $10. Since you havent sold it, you are not liable for US tax on the $9, and canada now treats its ACB as $10.
This works best if you wait until the next year after leaving, as many who leave US file a full-fledged 1040 for that year, which woud require reporting any sale.

[JGCA]

Thank you for the clarification so now I understand that non US citizens get the benefit but US citizen Aliens or green card holders must report the gains to US and Canada. I now understand, thnak you.