Dual citizen: Capital Gains in-kind transfer of taxable account ETF

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Gilgamesh
Posts: 78
Joined: Tue Apr 02, 2019 5:30 pm

Dual citizen: Capital Gains in-kind transfer of taxable account ETF

Post by Gilgamesh »

Dual citizen, USA resident, soon to be back being Canadian resident after over two decades.

Joint taxable/brokerage account with gains. Will do an in-kind transfer to a non-registered account in Canada. I assume I don't pay capital gains to USA at the time of this transfer.

How is gains that was realized in USA handled when I sell the ETF as a Canadian resident?

I know how Canada basis is determined (amount I transferred at the time of move, split evenly with my spouse for tax purposes). Therefore, I assume Canada will tax all of the gains after moving to Canada.

How do I determine how much I pay to USA out of the amount sold for the portions gained while in USA? Is this how it even works?

Thanks

P.S: seems like a simple, common answer to figure out on my own. Read posts back to Jan/2021 and could not find the exact answer. Tried google too.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Dual citizen: Capital Gains in-kind transfer of taxable account ETF

Post by nelsona »

The "new" cost for Canada is determined on the day of arrival in canada, regardless if you transfer the investments or not.

When you sell down the road, Canada will tax on that new basis, US will tax on the original basis (i'm assuming you know how to include reinvested distributions in your cost bases).

Since these ETFs will be considered Cdn-sourced (regardless of what type of investment they are) you will claim the Cdn tax on your 1040 using form 1116. US ignores that you've moved, you are taxed on the entire gain.

In general, the fact you move means very little change to your US tax return. You will now just have Cdn tax to write off against it.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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