How often to adjust ACB on USD holdings

Income tax policy, rules, problems, strategy and software. Property and consumption taxes too.
Wing
Contributor
Contributor
Posts: 277
Joined: 12 Nov 2016 21:02

How often to adjust ACB on USD holdings

Post by Wing »

I have 3 USD accounts - 1. bank account 2. fixed deposit 3. investments - stocks and ETFs. I haven't exchanged any USD to CAD during the year 2017.

When I received interest on 1,2 and dividends on 3 in the above accounts, in theory, I know I'll need to adjust my ACB of USD on hand. However, when I'm having 2-3 USD interest/dividends income during 1 month, do I really have to adjust my USD's ACB that many times (like 30-40 times a year without even counting the FX on stock transactions!)? Or, can I do it every month or quarter or even just once at year end?

I know I can use annual avg rate on the interest and dividend income.
gobsmack
Contributor
Contributor
Posts: 447
Joined: 04 Sep 2015 13:16

Re: How often to adjust ACB on USD holdings

Post by gobsmack »

It is up to you how often you want to do this. You will need the ACB when it comes time to file your taxes. I try to do it every quarter and, when I file my taxes, I review everything in order to make sure I did not miss any entries.
Wing wrote: 11 Jan 2018 13:19 I haven't exchanged any USD to CAD during the year 2017.
You may have incurred a deemed disposition if you used USD to buy anything (e.g., stocks, mutual funds, money market, etc): https://www.adjustedcostbase.ca/blog/ca ... ency-cash/
Wing
Contributor
Contributor
Posts: 277
Joined: 12 Nov 2016 21:02

Re: How often to adjust ACB on USD holdings

Post by Wing »

gobsmack wrote: 11 Jan 2018 14:14 It is up to you how often you want to do this. You will need the ACB when it comes time to file your taxes. I try to do it every quarter and, when I file my taxes, I review everything in order to make sure I did not miss any entries.
Wing wrote: 11 Jan 2018 13:19 I haven't exchanged any USD to CAD during the year 2017.
You may have incurred a deemed disposition if you used USD to buy anything (e.g., stocks, mutual funds, money market, etc): https://www.adjustedcostbase.ca/blog/ca ... ency-cash/
Sorry, let me clarify. By "how often", I didn't mean to ask how often by my work schedule but rather, if I must make an adjusting entry on EVERY TIME an interest income or dividend income (even when it's small, say under $50) was earned. Or, due to its small balance, CRA will allow an alternative method of calculation.

For the "deemed disposition" of FX when I use the USD cash to buy a USD stock, should I follow the superficial loss rule, where I shouldn't recognize a FX loss (when CAD appreciates) when I buy a USD stock within 30 days I just sold another USD stock (ie. purchase of USD)?
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: How often to adjust ACB on USD holdings

Post by AltaRed »

Wing wrote: 11 Jan 2018 20:19 Sorry, let me clarify. By "how often", I didn't mean to ask how often by my work schedule but rather, if I must make an adjusting entry on EVERY TIME an interest income or dividend income (even when it's small, say under $50) was earned. Or, due to its small balance, CRA will allow an alternative method of calculation.
Just total up all the income for a calendar year and use the annual forex rate to add it to your ACB. That said, IF you made a USD acquisition during the year, you will first have to calculate the ACB of the recurring income streams relevant to the date you spent USD to make the acquisition and I would tend to then use the monthly forex rates published by BoC.
For the "deemed disposition" of FX when I use the USD cash to buy a USD stock, should I follow the superficial loss rule, where I shouldn't recognize a FX loss (when CAD appreciates) when I buy a USD stock within 30 days I just sold another USD stock (ie. purchase of USD)?
Probably to be technically correct but I confess to not doing that over several years. I've just assumed forex did not change in that short intervening time of a few days to maybe at most a month. Generally speaking, I re-invest the funds pretty quickly, e.g. hours or days, rather than weeks. I can't imagine CRA making a fuss over that sort of thing. I might think differently if there was significant movement of the loonie but that would be a rare case.

Added: Most investors likely have never even thought of keeping track of ACB of USD in their USD section of their portfolio. I tend to go for practical solutions, i.e. the 80% rule.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
Wing
Contributor
Contributor
Posts: 277
Joined: 12 Nov 2016 21:02

Re: How often to adjust ACB on USD holdings

Post by Wing »

AltaRed wrote: 11 Jan 2018 20:33
Wing wrote: 11 Jan 2018 20:19 Sorry, let me clarify. By "how often", I didn't mean to ask how often by my work schedule but rather, if I must make an adjusting entry on EVERY TIME an interest income or dividend income (even when it's small, say under $50) was earned. Or, due to its small balance, CRA will allow an alternative method of calculation.
Just total up all the income for a calendar year and use the annual forex rate to add it to your ACB. That said, IF you made a USD acquisition during the year, you will first have to calculate the ACB of the recurring income streams relevant to the date you spent USD to make the acquisition and I would tend to then use the monthly forex rates published by BoC.
For the "deemed disposition" of FX when I use the USD cash to buy a USD stock, should I follow the superficial loss rule, where I shouldn't recognize a FX loss (when CAD appreciates) when I buy a USD stock within 30 days I just sold another USD stock (ie. purchase of USD)?
Probably to be technically correct but I confess to not doing that over several years. I've just assumed forex did not change in that short intervening time of a few days to maybe at most a month. Generally speaking, I re-invest the funds pretty quickly, e.g. hours or days, rather than weeks. I can't imagine CRA making a fuss over that sort of thing. I might think differently if there was significant movement of the loonie but that would be a rare case.

Added: Most investors likely have never even thought of keeping track of ACB of USD in their USD section of their portfolio. I tend to go for practical solutions, i.e. the 80% rule.
Thank you for your input.

I certainly need to give more thoughts into it. With CAD appreciated so much during the year, that triggered a bunch of FX losses with my USD stock purchases towards the end of the year (I held USD cash at 1.34 rate, earning interest income for months and used the USD cash to buy USD stocks when rate at 1.25 towards Fall, a good 7% loss right there!). Should superficial loss really applicable for USD (as a property), then I will not be able to claim the FX capital losses (when USD stocks were purchased) against my stock capital gains during the year as USD interest income was received every month (ie. within 30 days before and after every sale of USD, aka purchase of USD stocks).
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: How often to adjust ACB on USD holdings

Post by AltaRed »

I am not an expert on this by any stretch but I don't think some inconsequential USD income generated every few weeks and added to a much bigger USD base sum used to purchase a USD stock should be a superficial loss trigger.

I certainly have not worried about, for example, a $200 USD distribution from an ETF, resetting the superficial loss clock. I'd argue that since CRA allows the use of an annual forex rate for recurring income, there is no superficial loss in that situation.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
deaddog
Veteran Contributor
Veteran Contributor
Posts: 3422
Joined: 19 Jan 2008 19:59
Location: Central BC/Arizona

Re: How often to adjust ACB on USD holdings

Post by deaddog »

FWIW: Here is how I do it.

I use the monthly BoC rate for exchange

The ABC of any US stock in $Can is determined the month you buy the stock. The ABC never changes with the exchange rate.

Proceeds are calculated the month you sell using that months exchange rate.

The Dividends and the withholding tax are calculated using the exchange rate the month they are received.

It is quite possible to have a breakeven trade in US dollars and suffer a loss or have a capital gain in $Can because of fluctuating exchange rates.
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
User avatar
adrian2
Veteran Contributor
Veteran Contributor
Posts: 13333
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: How often to adjust ACB on USD holdings

Post by adrian2 »

deaddog wrote: 12 Jan 2018 00:06 FWIW: Here is how I do it.

I use the monthly BoC rate for exchange

The ABC of any US stock in $Can is determined the month you buy the stock. The ABC never changes with the exchange rate.

Proceeds are calculated the month you sell using that months exchange rate.

The Dividends and the withholding tax are calculated using the exchange rate the month they are received.

It is quite possible to have a breakeven trade in US dollars and suffer a loss or have a capital gain in $Can because of fluctuating exchange rates.
I do the same, but use the annual rate. We had this discussion several times in the past, and there is supporting verbiage from the CRA to use the annual rate not only for recurring income, but for capital transactions too. In the end, it all washes out.

I also adjust all USD cash / MMF / HISA holdings, as per the following example (freshly done this):
As of January 2018, the 2017 annual forex rate for USD has been published as 1.2986.
The 2016 rate was 1.3248.
Therefore, I add an entry in Quicken's USD taxable accounts for 01/01/2017 with the category "Forex", amount = (total cash/MMF/HISA, as of 31 Dec 2016, in USD) x (1.2986 - 1.3248). This eventually becomes a line in the calculation of taxable gains or losses, labeled as "US Buck" security.
I've also recalculated all Quicken 2017 USD transactions which were entered provisionally at the previous year rate (1.3248) at the now known rate of 1.2986 for 2017.
For 2018, I'll provisionally enter all USD transactions in Quicken converted from CAD at a rate of 1.2986.

The assumption I use for USD cash and equivalents is that the whole balance gets turned over (buy/sell/buy/sell/etc) at least once during a calendar year.
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
gobsmack
Contributor
Contributor
Posts: 447
Joined: 04 Sep 2015 13:16

Re: How often to adjust ACB on USD holdings

Post by gobsmack »

adrian2 wrote: 12 Jan 2018 08:54 I do the same, but use the annual rate. We had this discussion several times in the past, and there is supporting verbiage from the CRA to use the annual rate not only for recurring income, but for capital transactions too. In the end, it all washes out.
This is news to me. I missed this discussion if it has happened before.

For capital transactions, I have always used the exchange rate of the day the transaction settles and I always thought this was the correct way of doing it. If you go back to 2016, for example, CAD dropped sharply at the beginning of the year but the rate recovered later in the year. If you consider transactions that happened in the beginning of 2016, it would have been possible to save a lot of money in tax if the person calculated the gains using only the annual avg rate. Are you sure this is allowed by the CRA?
User avatar
adrian2
Veteran Contributor
Veteran Contributor
Posts: 13333
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: How often to adjust ACB on USD holdings

Post by adrian2 »

gobsmack wrote: 14 Jan 2018 10:28
adrian2 wrote: 12 Jan 2018 08:54 I do the same, but use the annual rate. We had this discussion several times in the past, and there is supporting verbiage from the CRA to use the annual rate not only for recurring income, but for capital transactions too. In the end, it all washes out.
This is news to me. I missed this discussion if it has happened before.
ACB Calculation, US stock+Dividend Reinvestment
gobsmack wrote: 14 Jan 2018 10:28 If you go back to 2016, for example, CAD dropped sharply at the beginning of the year but the rate recovered later in the year. If you consider transactions that happened in the beginning of 2016, it would have been possible to save a lot of money in tax if the person calculated the gains using only the annual avg rate.
For every example when one would gain, there is an example in other years when one would lose. It all washes out. As long as you're consistent with the methodology you report, and there's supporting evidence that it's an allowed method, I don't think CRA is going to object.
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: How often to adjust ACB on USD holdings

Post by AltaRed »

There is vast disagreement with Adrian's point of view so I would dismiss it outright. CRA is only conceding with respect to annual forex rate for recurring income during a calendar year to simplify calculation and reporting. There is too much literature from both CRA and accounting sources to argue otherwise on capital (and RE) assets.

It would be way too easy to game the system otherwise, arbitraging currency with capital assets. Money managers, corporations, trusts,etc. would be gaming the system as well. Not getting dragged into this debate again....
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
adrian2
Veteran Contributor
Veteran Contributor
Posts: 13333
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: How often to adjust ACB on USD holdings

Post by adrian2 »

AltaRed wrote: 14 Jan 2018 11:45 There is vast disagreement with Adrian's point of view so I would dismiss it outright. CRA is only conceding with respect to annual forex rate for recurring income during a calendar year to simplify calculation and reporting.
From my link above, entitled "Calculating and reporting your capital gains and losses":
CRA wrote:Report your gains or losses in Canadian dollars. Use the exchange rate that was in effect on the day of the transaction or, if there were transactions at various times throughout the year, you can use the average annual exchange rate.
I do not see anything supporting your interpretation that it is only for recurring income, it states clearly "reporting your gains or losses".
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: How often to adjust ACB on USD holdings

Post by AltaRed »

Adrian, your reference is NOT a tax guide. You keep bringing up that poorly written html that has nothing behind it. Go to the Capital Gains Tax Guide itself https://www.canada.ca/en/revenue-agency ... P317_34283

That said, if one was buying and selling one security several times a year, I do believe and agree with you that CRA would likely accept the annual rate. Day traders for example, or someone playing the trading range of one stock over the course of a year. It is a matter of common sense but I wouldn't use it for example if I bought a US stock in 2 separate 'half-positions' in one year, or say, 2 partial sales.

There are numerous tax court cases of the need to use settlement date for capital transactions. Try googling them.

Also, try these references:

https://www.taxtips.ca/filing/foreignamounts.htm and https://www.taxtips.ca/personaltax/inve ... shares.htm Adrian, you may with to read the difference between Foreign Income (first link) and capital transactions (second link)

http://www.advisor.ca/tax/tax-news/solv ... ems-192435

https://www.theglobeandmail.com/globe-i ... e28622614/

https://ca.rbcwealthmanagement.com/docu ... 17f6fcfa4a Adrian, note the Conclusion on the last page.

Many other Tax Accounting firm links on the same subject. I truly wish you would let go of that link you keep bringing up. I believe it is a disservice to taxpayers.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
adrian2
Veteran Contributor
Veteran Contributor
Posts: 13333
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: How often to adjust ACB on USD holdings

Post by adrian2 »

RBC wrote:If you sell publicly-traded shares or redeem mutual funds (e.g., mutual fund trust units or shares of a mutual fund corporation) that are denominated in a foreign currency, you may trigger a foreign exchange gain or loss. You must convert the adjusted cost base (ACB) and sale proceeds of the security into Canadian dollars to calculate your capital gain or loss.

For Canadian tax reporting purposes, the foreign exchange rate that was in effect on the date of the transaction (i.e., the settlement date of the purchase and the settlement date of the sale) is used to calculate the capital gain or loss in Canadian dollars. If you make several purchases of a security at various times throughout the same year, you may use the average annual exchange rate for these purchases.
AdjustedCostBase.ca wrote:The CRA permits you to use the exchange rate from the day of the transaction date, or the average annual exchange rate if multiple transactions occurred over the course of a year. If a currency exchange was involved in the transaction, you may use the actual exchange rate you received.
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: How often to adjust ACB on USD holdings

Post by AltaRed »

That is only for multiple transactions of the same security, a point I did acknowledge in my post above. It is a disservice to imply It applies to multiple transactions in the portfolio overall for a range of securities for example. It does not apply across the portfolio.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
adrian2
Veteran Contributor
Veteran Contributor
Posts: 13333
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: How often to adjust ACB on USD holdings

Post by adrian2 »

AltaRed wrote: 14 Jan 2018 15:48 That is only for multiple transactions of the same security, a point I did acknowledge in my post above. It is a disservice to imply It applies to multiple transactions in the portfolio overall for a range of securities for example. It does not apply across the portfolio.
I'm not sure why this is so important to you, that you need to shut me down ("it's a disservice" etc). It's a 50/50 chance that I report more gains than I should (according to you, I'm convinced that I'm following an acceptable method).

Let's just agree to disagree.
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: How often to adjust ACB on USD holdings

Post by AltaRed »

From my perspective, it is important for readers of this forum to know the facts and the circumstances behind the facts to get it right.... rather than what you or I might do personally.

There are threads in a number of forums on ACB issues, and forex conversions, and when currency forex gains/losses must be reported (when they exceed $200) where investors/taxpayers are trying to do the right thing. If we are going to 'state' something, we need to provide sufficient context. As it turns out, the CRA link you provided has no context... i.e. sloppy writing without context. It is only when one digs into the appropriate sources that one can understand the context of 'multiple transactions'.... and the annual rate is limited to 'recurring income' as I have said, and as I learned today, multiple transactions of the same security in a given year (as you have rightfully pointed out). Both of these allowances are logical and practical, but it is NOT correct to use an annual rate on 'one off' capital transactions, nor is CRA going to permit folks to arbitrage the system by playing the forex game.

I won't even begin to think about what one does with puts and options and any other of those situations involving forex, but it's been discussed in other forums (if not here). All I know is it is complicated.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: How often to adjust ACB on USD holdings

Post by kcowan »

adrian2 wrote: 14 Jan 2018 16:01Let's just agree to disagree.
I have used the June 30th FX except for the T1135. I apply it to dividends and interest. CRA questioned it last year and I showed them the calculations. "OK thanks CRA said." I agree that it works out the same on average and is much less work. Consistency is really important for the CRA. Plus they seem to be numerically challenged.

(For T1135, I do 12 calculations all month-end to determine the high point.)
For the fun of it...Keith
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: How often to adjust ACB on USD holdings

Post by AltaRed »

kcowan wrote: 14 Jan 2018 16:57 I have used the June 30th FX except for the T1135. I apply it to dividends and interest. CRA questioned it last year and I showed them the calculations. "OK thanks CRA said." I agree that it works out the same on average and is much less work.

(For T1135, I do 12 calculations all month-end to determine the high point.)
I agree the T1135 is specific and not related to the broader question Adrian and I have been arguing about.

FWIW, tax software (or at least some providers like UFile) use the BoC annual rate for recurring USD income if one inputs USD. It does not do it for capital transactions on Schedule 3 for obvious reasons.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
adrian2
Veteran Contributor
Veteran Contributor
Posts: 13333
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: How often to adjust ACB on USD holdings

Post by adrian2 »

Let me add one more qualifier in support of my chosen method: by and large, I'm buying and selling US$ denominated securities using US$ cash and/or margin in my US$ denominated account. Any discrepancy between the forex I use for securities would be counterbalanced, for the exact same difference in dollars and cents, by an opposite number involved in the forex I use for US$ cash (that is paid or received by the transactions securities). As I do report, consistently, the changes in the total US$ cash due to annual forex average changes (which is incidentally the real subject of this topic) as a capital gain or loss that is totaled with other gains and losses, it all balances out.

I'm betting the vast majority of taxpayers that have a US$ brokerage account fail to report US$ cash gains and losses at all. It's a complicated calculation, after all (has to be done for every sell and buy of every security, done on the US$ sub-account).
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
User avatar
deaddog
Veteran Contributor
Veteran Contributor
Posts: 3422
Joined: 19 Jan 2008 19:59
Location: Central BC/Arizona

Re: How often to adjust ACB on USD holdings

Post by deaddog »

adrian2 wrote: 14 Jan 2018 17:51

I'm betting the vast majority of taxpayers that have a US$ brokerage account fail to report US$ cash gains and losses at all. It's a complicated calculation, after all (has to be done for every sell and buy of every security, done on the US$ sub-account).
Wouldn't CRA pick that up as the brokerages report closed trades to the CRA?
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
User avatar
adrian2
Veteran Contributor
Veteran Contributor
Posts: 13333
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: How often to adjust ACB on USD holdings

Post by adrian2 »

deaddog wrote: 14 Jan 2018 17:54
adrian2 wrote: 14 Jan 2018 17:51 I'm betting the vast majority of taxpayers that have a US$ brokerage account fail to report US$ cash gains and losses at all. It's a complicated calculation, after all (has to be done for every sell and buy of every security, done on the US$ sub-account).
Wouldn't CRA pick that up as the brokerages report closed trades to the CRA?
I have heard of CRA catching an unreported T3 or T5, I've never heard of CRA questioning of gain or losses based on the information reported by brokers.

After all, every broker I know of states that the cost base shown on their statements should not be used for tax reporting.
Examples I can quickly think of, where the cost base as per statements is wrong, in C$ accounts (all but the first one applicable to yours truly):
- the same security may be acquired in different non-registered brokerage accounts,
- an option gets assigned,
- a superficial loss gets triggered,
- anything involving flow-through shares.
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
User avatar
kcowan
Veteran Contributor
Veteran Contributor
Posts: 16033
Joined: 18 Apr 2006 20:33
Location: Pacific latitude 20/49

Re: How often to adjust ACB on USD holdings

Post by kcowan »

adrian2 wrote: 14 Jan 2018 18:16I have heard of CRA catching an unreported T3 or T5, I've never heard of CRA questioning of gain or losses based on the information reported by brokers.
I would really appreciate any reports of the CRA questioning the FX rate used and not having a successful outcome. I have had several and all ended successfully once they understood how I was handling them.
For the fun of it...Keith
User avatar
DavidR
Veteran Contributor
Veteran Contributor
Posts: 1937
Joined: 30 Oct 2005 08:33
Location: Toronto

Re: How often to adjust ACB on USD holdings

Post by DavidR »

adrian2 wrote: 14 Jan 2018 17:51 I'm betting the vast majority of taxpayers that have a US$ brokerage account fail to report US$ cash gains and losses at all. It's a complicated calculation, after all (has to be done for every sell and buy of every security, done on the US$ sub-account).
I agree. I have a couple of clients who carry large balances of US$ cash, and we do the calculations for them. But for most, when US$ cash from dividends or the occasional sale is reinvested into US securities fairly quickly, it is immaterial. I am sure that many/most DIY folk (and many/most tax preparers too) are unaware of the issue or consider it to be immaterial.

I have noticed that some full service brokerages are doing the calculations in some circumstances. For example, RBC Wealth Mgmt calculates and reports realized gains and losses on the US$ investment savings account. (But not on US$ cash itself). And I have a client where TD reports on US$ cash...
Perhaps change is coming slowly
mewmew
Contributor
Contributor
Posts: 154
Joined: 14 Jan 2018 22:39

Re: How often to adjust ACB on USD holdings

Post by mewmew »

DavidR wrote: 15 Jan 2018 10:57
adrian2 wrote: 14 Jan 2018 17:51 I'm betting the vast majority of taxpayers that have a US$ brokerage account fail to report US$ cash gains and losses at all. It's a complicated calculation, after all (has to be done for every sell and buy of every security, done on the US$ sub-account).
I agree. I have a couple of clients who carry large balances of US$ cash, and we do the calculations for them. But for most, when US$ cash from dividends or the occasional sale is reinvested into US securities fairly quickly, it is immaterial. I am sure that many/most DIY folk (and many/most tax preparers too) are unaware of the issue or consider it to be immaterial.

I have noticed that some full service brokerages are doing the calculations in some circumstances. For example, RBC Wealth Mgmt calculates and reports realized gains and losses on the US$ investment savings account. (But not on US$ cash itself). And I have a client where TD reports on US$ cash...
Perhaps change is coming slowly
When you report for clients, do you consider the FX losses as superficial loss when the large balance of US$ cash is earning interest income every month (ie. purchase of US$)?
Post Reply