189 thoughts on “Be on the Lookout! Bubblebustin to be on CBC The National- on the #TransitionTax”

1. Barbara, is the capital gaiins tax all or nothing.?

   i.e. below 75K joint income you pay no CGT and above 75K you pay the full 13% or is it graduated? Worth checking.

2. You can find the capital gains tax worksheet here https://taxmap.irs.gov/taxmap/instr/i1040gi-011.htm#w24811v12

   it’s graduated. But it’s complicated because the thresholds include your ordinary (and FEIE excluded) income. For married filing jointy with 100k of other “taxable” income (salary/interest/etc less personal exemptions and standard/itemized deductions), the ordinary income exhausts the zero tax bracket. The first 370,700 (computed as the 470,700 threshold less the 100k of other taxable income) of capital gain will be taxed at 15% and the balance at 20%.

3. @Portland: See my comment on the previous page. My friends’ combined income is over 75K, so they would be whacked with the full 15% CGT. No graduation mentioned in any IRS instructions or other expert commentary.

4. @Barbara
   If end of year only reporting is adhered to by all EU banks then I think there would be little risk of your friend ignoring the reporting the sale. Can he get a FOI from the Spanish bank as to what was reported?
   The problem Uncle Tell’s statement,
   “If the IRS doesn’t know the initial cost of the house, how would they know there was a capital gain on the sale? Let IRS think if it is worth their time to ask where the money came from”,
   is that IF the sale is reported with very little capital gain and an audit is triggered, your friend would be asked to provide proof of the original cost of the house. They don’t take your word for it!
   As I think Portland said, they are understaffed and over worked, I personally wouldn’t do anything that changes the regular reporting he sends on his return.

5. John Richardson has made an excellent submission to the Senate Finance Committee on the Repatriation/Transition and GILTI taxes, with links to important references and the recent CBC coverage of the issue:

   http://www.citizenshipsolutions.ca/2018/05/05/part-11-responding-to-the-sec-965-transition-tax-letter-to-the-senate-finance-discussing-the-effects-of-the-transition-tax-on-americans-abroad/

6. URGENT I have been in contact with my local MP (conservative) and he is willing to submit a Question for Question Period regarding the Transition Tax. What I need to do is put together some background information and the actual wording of the question we want to have asked. There is no guarantee that it will be selected but it is certainly a shot. My understanding is that if not selected for this weeks question period then it can sit in the queue and be picked up at a later date.

   My first kick at the can in composing a question — ” Mr. Speaker, The United States as part of their tax reform has recently passed a new law aimed at bringing home the profits of money off shored in large multi-national corporations. While it is laudable to repatriate these earnings back to the US homeland the application of this law makes no distinction between the large American corporations and those small Canadian corporations owned by Canadian citizens permanently resident in Canada but also hold a secondary US citizenship. These Canadian corporations owned by doctors, restaurateurs and small mom and pop shops are not Google and Apple . These corporations hold the retirement savings of Canadian citizens; the retained earnings of Canadian entrepreneurs ear marked to grow and expand their business. Application of this tax will effectively bankrupt Canadian businesses and wipeout the pension plans of our Canadian citizens. It is a violation of the Canada -US tax treaty as the US has created a fictional tax event retroactive to 1986 where the first right of taxation has been usurped by the US. First installment of this tax is due June 15 2018 .

   Will the government of Canada commit to negotiating with US treasury to exempt Canadian corporations from the disastrous effect of this tax? Will the government use the the Canada US tax treaty to protect our sovereignty and tax base against this raid by the US government? The Finance Minister has committed to studying the effects of this extraterritorial law. But time is of the essence. Will the government provide direction to our citizens prior to June 15 2018 when the first installment is due.
   Those affected are first and foremost Canadian citizens ,resident in Canada , and deserve the protection of the Canadian government.”

   Looking for your feedback – want to make sure I set the right tone and get the right question asked that will help us the most. Also any suggestions as to what I can include in the package that I need to send would be helpful.

   Keep our fingers crossed

7. @CAB

   Thank you for your post.

   You ask a very important question. I have taken your comment and made a separate post to keep responses and suggestions organized in one place.

   http://isaacbrocksociety.ca/2018/05/05/brock-project-advice-on-how-to-explain-the-effects-of-the-ustransitiontax-through-a-question-in-the-house-of-commons/

   @All

   This will be an important “thought experiment”. The comments at the CBC articles this week prove how difficult it is to explain the transition tax and the damage that it causes. This is an opportunity to think about how to better present and explain the issues.

8. Hmm. The Christian Science Monitor published a superb article, and the next thing that happened is that the first 13 comments are good ones! How does this happen? Are the CBC’s trolls unaware of the CSM?

   https://www.yahoo.com/news/accidental-americans-hidden-costs-prove-taxing-183955237.html

9. @ND

   There is a lot of anti-Americanism in Canada, plus the Canadian government itself has done a lot to vilify corporation owners, in the last year claiming we haven’t been paying our “fair share”. It doesn’t help that the CBC didn’t make it very clear that we aren’t Americans flocking up here to open corporations to evade US tax, as though Canada is a tax haven.

10. Also, I swear, there is something particularly obtuse about the CBC comment board. I absolutely hate the place. My hunch is that since it’s the CBC – liberal bias false news elite establishment media supported by the tax dollars of hardworking citizens yada yada – it attracts angry doofii from every end of the political spectrum.

11. If the trolls who comment on CBC articles don’t know that Canada has high taxes, maybe the trolls are Americans?

12. Heidi:

    “FATCA asks US citizens to report the max amount on their account during the year, but Banks are asked to report year ending balance, why not the same demand?”

    I think that perhaps it’s because the banks are not law enforcement agents and have no evidence of tax evasion or other wrongdoing and can’t be required by the IRS to search for high balance; it’s the existence of the account that is being reported, as with CRS.

    Whereas on the 8938 self-report, the IRS can ask whatever it likes, and what it likes is tracking money

13. The CS Monitor article says “Give us your feedback.” “Should we come back to this topic?”

    Requires your email address.

    https://www.csmonitor.com/World/Europe/2018/0504/For-accidental-Americans-the-hidden-costs-prove-taxing

14. Karen said:

    … failure to file a form 8833 does not preclude the taxpayer from arguing that the treaty applies – and the fine for failure to file form 8833 is $1000. It may be a valid strategy to omit the 8833 and wear the penalty should the IRS challenge. For taxpayers with no US assets who are Canadian citizens, it may not be worth the cost for the IRS to challenge in the first place.

    The 8833 instructions mention the following position:

    * That a treaty grants a credit for a foreign tax which is not allowed by the Code;

    That seems applicable to a tax on pretended distribution of corporation earnings which (if actually distributed) would attract “foreign” tax for which the treaty would require the US to give credit. What do you think?

    Reporting is specifically required, for this position; but as you suggest, the USC owner/shareholder could omit the 8833 and risk the $1000 fine, should the IRS challenge.