reporting deemed disposition on 1040NR

[chocopops]

I'm a Canadian citizen and I moved to the US in October 2015. I've worked and received a salary in the US since then, and will be filing 1040NR for 2015. I own Canadian stocks (acquired before the move) which is subject to deemed disposition. I would like to step up the cost basis for the US and therefore I'm completing Form 8833 pursuant to Rev. Proc. 2010-19, specifically section 4.02.

Section 4.02 states: (3) The individual must make the election by reporting the deemed disposition on the individual’s timely filed U.S. federal income tax return for the individual’s first taxable year ending after the individual’s change of residence AND by attaching a Form 8833 to such return [...].

I filled out 8833, but where do I need to report the deemed disposition on my 1040NR? Is it on schedule OI under "L. Income Exempt from Tax"? If so, does "(c) Number of months claimed in prior tax years" represent the total time I've owned the stocks in Canada (eg 4 years)?

Thanks a lot!

[nelsona]

This would be your first 1040, not 1040NR. You are not resident yet.

[chocopops]

Thank you. A couple questions:

a) Does this mean I do not need to file anything with regards to my deemed disposition on my 2015 1040NR (no 8833, no T1243 attached)?
b) Where do I report the deemed disposition on my 2016 1040?
c) If I sold my stocks during 2016, can I already use the new cost basis to calculate the gains, as I'll be filing 8833 along with my 2016 1040?

[nelsona]

1040NR is for US-sourced income. cap gains are not Us-sourced unless you are a US resident, which you are not since you filed 1040NR. so there is nothing for you to do on your 2015 1040NR.

so,
a) correct. That will be filed with your 1040 for 2016
b) you report it on the statement you will prepare for the rev-proc. deemed dispositions are not taxable events, only the selling of stock is, and the rev proc will change your basis (when you sell) that you report on schedule D.
c) yes, that will be the whole purpose of filing the rev proc.

[chocopops]

Thank you very much nelsona for your help, in this post and throughout this forum. Your posts have been a very helpful resource in answering many of my questions. Thanks again!

[tony]

Nelsona,
1. is 8833 with respect to this mutual fund a mandatory? Or optional?
2. in case all my funds are losing, it'd be profitable for me to be opted out of 8833.
Example:
2009 purchased a mutual fund book cost $1000
2010 become canadian resident, mutual fund FMV $100,
2015 cease to be canadian resident, mutual fund FMV $100 ($0 gain) deemed disposition on canada exit tax

3. In the case of multiple mutual funds, can I select some winning funds to be reported on 8833? (while the losing funds to use its original book cost?)

thanks

[nelsona]

It isn't form 8833 that you are filing, it is rev proc 10-19, which is written ON an 8833.

Rev Proc 10-19 is optional. but it must be applied to ALL your deemed dispositions or NONE, you can't pick and choose.

[tony]

Thanks Nelsona.
One last question, what kind of property that is mandatory reporting on form 8833?
There is a penalty of $1000 if not reporting.

thanks

[nelsona]

Please read rev prov 10-19, it explains what you need to report. It is basically all that was deemed disposed on your departure return. . Stop referring to form 8833. That is not important.