Own founder shares in private comp. in Canada and moving US

[M_A_R]

I was wondering where I declare the founder shares upon entering the US and if the company sells while I'm in the states are there implications with both canadian and US taxes?

Thanks for your help.

[JGCA]

On departing Canada you are deemed to have disposed of the shrs held by you in the Private Corp (CCPC). THere will be a capital gain on this and then Canada will tax you on this gain if it is taxable you may have cap losses on other property to offset this in Cananda. You still own the shrs.

While in the US if you sell them then the US will tax you only on the gain over the cost you declared when you left Canada. Any dividends you receive if any will be taxed by Canada also but not the gain it is taxed in US now that you left Canada.

[JGCA]

Forgot to mention if indeed there are dividends paid on the shrs in question when you are now resident of the US they will be taxed in the US and Canada as I explained and there should be witholding tax on the dividends paid to you which you can claim as a tax credit on your 1040 US return, this also applies to actual dividends or deemed dividends if you subsequently redeem the shares instaed of selling them.

[nelsona]

the future taxation of the shares in canada depends on whether the CCPC is considered taxable Cdn property (TCP).

So cap gain taxation in canada may continue.

See:
http://www.cabusinessadvisor.com/Defin.htm#T

for the definition of TCP.

[JGCA]

The corp has to hold mainly realestate 90% or more to be considered TCP in this case .

[nelsona]

I believe it is 50%, and there is look-back, but that is correct.

[JGCA]

Yes Nelsona it is 50% not 90% I noticed that recently when I had to do a file , thanks