Question about RRSP income reporting on Form 8891

[Lorraine65]

I moved to California in May 2002 and obtained RRSP summaries from my Financial Advisor with the values for both my regular and locked in RRSPs effective the day I moved down. Unfortunately the summaries don't state book value. I do have book values in the Quarter 3 and year-end summaries for 2002. The proper forms have been submitted to the IRS in 2002, 2003, and 2004 for both the regular RRSP and the LIRA. I don't think my Tax preparer added income to the 2002 California tax return and I never realized this was necessary or how to do this since.

My questions are related to how/what to report on the Form 8891 for 2005, since I cashed in the regular RRSP in February 2005.

From reading posts from this forum, I know the values to report on form 8891 include the total sale price (minus sale costs), and the income based on the date I moved to the United States. I also know the income is calculated by subtracting the book value (on the date of entry) from the sale price. My questions are as follows:

1. Do I need the book value for the exact date I moved down to California, or can I use the book value effective September 30, 2002 or December 31, 2002?
2. If I need the book value for the exact date I moved down, could I use the book value for the most recent report prior to my move date, if I don't have the value on the exact date?
3. When calculating the gain, can I subtract the book value from sale price in Canadian currency (actual gain) and then convert to U.S. currency based on the Bank of Canada exchange rate on the date of sale....or do I have to convert the book value to U.S currency on the date of entry into the U.S and subtract that from the sale price in U.S. currency on the date of sale?

The reason I ask is that there is only ~$5000 difference (in Canadian currency) between the sale price and book value when I moved down to California, however based on the rate of exchange when I moved down versus when I cashed in the RRSP, the difference works out to ~19,000 income (in U.S. currency), which is more than the actual gain from when I started to contribute to the RRSP (even in Canadian currency).

Thanks,

Lorraine

[nelsona]

You need the book value on the day you arrived in US (likely may 2002), or the day you chose to begin treating your self as a US tax resident (likely jan 2002 in you filed your 2002 1040 as a full-year resident).


It should not be difficult to determine book value if you have your statements from that time (its the price you PAID for what you currently had a tthat time). You would have had to use these values to properly report your California tax on your RRSP and lira. This has nothing to do with market value when you arrived, except for cash.

I'm puzzled as to how you would know your book value 'intermittently'

You do have to account for the change in the Cdn dollar. Even if you money was just sitting there in cask for these 4 years, it has grown vs. US dollar, and thus you have a capital gain.