USD "Loss" in RRSP

canadiandeserter · Post by **canadiandeserter** » Mon Oct 30, 2017 7:28 pm

Assume one held an RRSP savings account (holding CAD cash) and closed it after becoming a US tax resident. The cost basis of the account would be the contributions plus interest converted to USD on the dates paid. If the funds are withdrawn when CAD is lower, there would be an ordinary loss in USD, right?

For example, assume the RRSP account had one cash contribution of $1,000 when the USD/CAD exchange is 1.0:1 and one cash withdrawal of $1,000 when the USD/CAD exchange rate is 0.9:1. From the US point of view, the $900 USD withdrawal has a basis of $1000 USD, so the account experienced a "loss" of $100 USD.

Where in the 1040 tax return is this foreign exchange loss reported?

Thank you!

nelsona · Post by **nelsona** » Tue Oct 31, 2017 7:27 am

Income from an RRSP is considered pension income.

Your value for US purposes is its book value on the day you become a US taxpayer, so there may not be much loss to claim.

However, if there were, you could only claim the credit once that account is been collapse completely, and it would be called a terminal loss on a pension account, and would be included on schedule A as a miscellaneous loss (subject to the 2% threshold).

nelsona · Post by **nelsona** » Tue Oct 31, 2017 9:05 am

Just a clarification that you *can* choose, rather than the arrival in US value, the contribution totals as your cost basis going forward, if it is to your advantage (ie. gives you a higher tax-free value.