Question: US Tax Exposure + Share Purchases


A client had the following scenario:

· Client exited Canada in 2015, and became a US resident;

· Subsequently purchased $100k of stocks;

· Moved back to Canada in 2017, and became a Canadian resident;

· In 2018, the client sold his stocks for $150k

The client was concerned about what his US tax exposure was, and asked for clarification.

In a scenario like this, the main concern is always departure tax (aka the nasty “Deemed Disposition.)” The good news is that the US doesn’t have a departure tax on non-US citizens, so there isn’t any US tax exposure here.

As for Canadian tax, remember that the ACB on those shares is going to be whatever the fair market value was on your entry date back to Canada. (Watch the forex on this too.)

Usual Disclaimer: This information is for general purposes only, and deals with complicated and time-sensitive info that may not apply to your situation. Tax rules are always changing, and this information may not be current. Tax is complicated, this information is not tax advice, and don’t rely on this info to make tax decisions – Hire someone to help you.

Further reading: https://www.irs.gov/individuals/international-taxpayers/expatriation-tax