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