rev procedure 2010-19 deemed disposition

michsim · Post by **michsim** » Sun Apr 17, 2011 12:43 pm

Hello and thank you for the feed back,

When reporting deemed disposition resulting in a loss the revenu procedure
says that an individual may not make an election under Article XIII(7).
In this case the individual reported a loss on various investments ( mostly mutual funds).
However the reported properties on leaving Canada included real estate which is not subject to deemed disposition upon leaving Canada.
Question: The loss reported could have been a gain had the real estate holdings ( 2 rental properties and one principal residnece) been reported on Schedule D as a deemed disposition. Is it possible in such a case to elect under XIII(7). Hope this is clear, my apologies if not. CAn add detials on request.

nelsona · Post by **nelsona** » Sun Apr 17, 2011 4:59 pm

The rev proc deals ONLY with the investments subject to deemed disposition (these go on a separate form for CRA).

It is to you advantage NOT to use the deemed price for US purposes. IRS just makes this more clear by not allowing you to.

Your home is never reported as deemed. The real estate can be reported, but is not subject to this procedure, since it is a separate election, not a forced deemed disposition.

michsim · Post by **michsim** » Sun Apr 17, 2011 5:18 pm

Thank you Nelsona.
In such a case does the new US resident have to report FMV upon departing to the IRS as a procedure similar to 2010-19 or is FMV documentation on moving adequate for future supporting documentation when principal residence and/or rental real estate is sold.
If property continues to be rented the US depreciation would be based on the lower of original cost or FMV upon departure or alternatively undepreciated cost per canadian rental reported to Canada?
Thank you.

nelsona · Post by **nelsona** » Sun Apr 17, 2011 5:59 pm

If the property is not subject to deemed disposition, it will be subject tO Cdn tax wjhen it is truly disposed of. Only at that time will cost basis need to be determined.

Read the guide on renatl property for what basis to use. If there has been no change of use, it is the original cost basis. If there has been cange of use, then the guide will tell you which one to use.

michsim · Post by **michsim** » Sun Apr 17, 2011 6:05 pm

Thank you again Nelsona.
My concern was the cost basis to be used upon filing beginning to file rental statement on the US side. Original cost exxhanged at the rate of the date of purchase or FMV upon departure and arrival in the US or other.

nelsona · Post by **nelsona** » Sun Apr 17, 2011 6:11 pm

Already answered: look in the guide.