PART II
As usual Andrew Nelson has come up with more information with a reference to the Deloitte site.
Gary Gauvin and i will look at the situation at the end of October and send something else
-Original Message-----
From: Nelson, Andrew G. [mailto:agnelson at cal.ameren.com]
Sent: Wednesday, October 05, 2005 8:31 AM
To: taxman at centa.com
Subject: RE: RRSP distributions - what is basis?
Background on the change:
The release that you are talking about is probably similar to the
deloite one below:
http://www.deloitte.com/dtt/newsletter/0,1012,sid%253D3634%2526cid%253D72550,00.html#rules
The issue with regards to RRSPs, as was pointed out in the article is:
Are RRSPs employer-sponsored or not?
The IRS has NEVER said that RRSPs are employer sponsored, and that is
why we have had these innumerable changes in
policy by IRS with respect to reporting etc. They are TRUSTS in the eyes
of IRS.
Had they been considered employer-sponsored, we would not have had to go
thru the Form 3520 fiasco a couple of years ago, as the rules on Cdn
employer-sponsored plans (in the treaty) would have clearly taken
effect.
The IRS simply does not view RRSPs as employer-sponsored pensions, and
thus the wording of the applicable section
of the IRS Code does not apply to RRSPs and in the specific case of this
e-mail, does not apply to US citizens in any event.
****This is the new section of IRC that is in question.****
"72(w) APPLICATION OF BASIS RULES TO NONRESIDENT ALIENS. --
72(w)(1) IN GENERAL. --Notwithstanding any other provision of this
section, for purposes of determining the portion of any distribution
which is includible in gross income of a distributee who is a citizen or
resident of the United States, the investment in the contract shall not
include any applicable nontaxable contributions or applicable nontaxable
earnings.
72(w)(2) APPLICABLE NONTAXABLE CONTRIBUTION. --For purposes of this
subsection, the term "applicable nontaxable contribution" means any
employer or employee contribution --
72(w)(2)(A) which was made with respect to compensation --
72(w)(2)(A)(i) for labor or personal services performed by an employee
who, at the time the labor or services were performed, was a nonresident
alien for purposes of the laws of the United States in effect at such
time, and
72(w)(2)(A)(ii) which is treated as from sources without the United
States, and
72(w)(2)(B) which was not subject to income tax (and would have been
subject to income tax if paid as cash compensation when the services
were rendered) under the laws of the United States or any foreign
country."
**********
AGN
-----Original Message-----
From: centapede-bounces+agnelson=cal.ameren.com at lists.centa.com
[mailto:centapede-bounces+agnelson=cal.ameren.com at lists.centa.com] On
Behalf Of centapede at lists.centa.com
Sent: Wednesday, October 05, 2005 9:50 AM
To: CENTAPEDE; Webmaster at Jurock. Com
Subject: RRSP distributions - what is basis? -
askinternational income tax expert preparation & immigrationconsultant
david ingram, North Vancouver, BC,Canada experts on RRSP RESP IRA 401(K)
radio CKBD 600AM 9 AM Sundaymornings on Fred Snyder's IT's Y
QUESTION:
My client is dual citizen, U.S./Canada. He lived and worked in Canada
for 15 years and contributed to RRSP. He returned to the U.S. in 1992
and has been reporting correctly to defer the U.S. tax on the RRSP
income. Does he have basis in the U.S. to the extent of his
contributions plus interest, dividends and realized gains in 1992? Is
the U.S. citizen returning to the U.S. treated differently from a
Canadian citizen who becomes a U.S. resident with an RRSP?
I have some complicated retirement issues and may need your tax prep
services. Thank you in advance.
-------------------------------------------
david ingram replies:
Up until noon yesterday, I would have automatically said that your
client has a basis for the value of the RRSP when he returned across the
border for his contributions at least.
But apparently there is a KPMG release which I have not seen that
suggests that such is not the case because of a US change in Oct or Nov
2004.
This will be the subject of a little research project that Gary Gauvin
and I intend to follow up with after the Oct 15th second or third
deferral deadline.
I will pass this along to the list and If anyone has a definitive
answer, please pass it along.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show
called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the
internet at
www.600AM.com <http://www.600am.com/>
Call (604) 280-0600 to have your question answered. BC listeners can
also call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists US /
Canada Real Estate Specialists Home office at: 4466 Prospect Road North
Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 9 AM to 9 PM 7 days a week (please do not fax or
phone outside of those hours as this is a home office)
email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com
<http://www.centa.com/> www.david-ingram.com
<http://www.david-ingram.com/>
Disclaimer: This question has been answered without detailed
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Be ALERT, the world needs more "lerts"
This from "ask an income tax and immigration expert" from www.centa.com
<http://www.centa.com/> or www.jurock.com <http://www.jurock.com/> or
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ask international income tax expert preparation & immigration consultant
david ingram, North Vancouver, BC, Canada experts on RRSP RESP IRA
401(K) radio CKBD 600AM 9 AM Sunday mornings on Fred Snyder's IT's YOUR
MONEY
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