Canadian Stock Earnings, How Reported?

[sumtaxs...@hotmail.com]

Client purchased stock in Canada, sold in 2007 on the Canadian
market.

Question 1 -- has Patriot Act created the requirement for the Candian
company to send a 1099 to IRS? There is just 1 transaction and it is
for more than $10k

Question 2 -- does anyone have experience with whether Canadian tax
forms are required?

Question 3 -- is this potentially excludable from consideration as
gross income on US tax return?

thanks in advance for helpfulness

-shannon

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

[John L]

>Question 1 -- has Patriot Act created the requirement for the Candian
>company to send a 1099 to IRS? There is just 1 transaction and it is
>for more than $10k

Canada is a separate country. US law doesn't apply there.

>Question 2 -- does anyone have experience with whether Canadian tax
>forms are required?

By my limited understanding of the US-Canada tax treaty, if your
client is a US resident, he owes US tax but not Canadian tax on his
gains.

>Question 3 -- is this potentially excludable from consideration as
>gross income on US tax return?

Dream on.

R's,
John

[parrisb...@yahoo.ca]

On Jan 9, 4:27 pm, jo...@iecc.com (John L) wrote:
> >Question 1 -- has Patriot Act created the requirement for the Candian
> >company to send a 1099 to IRS? There is just 1 transaction and it is
> >for more than $10k
>
> Canada is a separate country. US law doesn't apply there.
>
> >Question 2 -- does anyone have experience with whether Canadian tax
> >forms are required?
>
> By my limited understanding of the US-Canada tax treaty, if your
> client is a US resident, he owes US tax but not Canadian tax on his
> gains.
>
> >Question 3 -- is this potentially excludable from consideration as
> >gross income on US tax return?
>
> Dream on.
>
> R's,
> John

Question 2 - Back up. Treaty does apply but whether a Canadian Tax
Return need to be filed depends. You need a Canadian Tax Preparer to
answer that question, or at least a US Tax Preparer who know Canada-US
Tax Treaty. After all, the Canadian Company will have issued a T5008
to the Canada Revenue Agency (but not a 1099 to the IRS. They will be
looking for details from the seller.

And in case you think that the T5008 isn't going to raise flags to the
IRS, the CRA has an information exchange treaty with the IRS.

Question 3 - Yes, it is through the 2555 BUT you will immediately ruin
your chances of an EIC or CTC, which for most people filing a 1040 is
their refund. So dream on.