Questions on inheritance from Canada to the US by

Sent: Tuesday, January 11, 2005 7:38 PM
To: taxman at centa.com
Subject: Questions on inheritance
David Ingram,
JXXXXXX XXXXX (my brother in law) suggested I send you an email describing
my situation, so you could advise me on any laws or taxes.
I am a Canadian citizen, but have lived in United States since 1971, working
here as a resident alien, (green card).  I have never worked in Canada,
therefore never filed any tax returns there.
My mother passed away in December 2004, I will inherit close to 500,000.00.
The attorney in Toronto handling the estate, states my portion of her
portfolio can be liquidated and sent to me in US funds.
I have spoken to both my CPA and financial advisor here, and both have
assured me that there
is no tax in the US on an inheritance to a beneficiary.  The financial
advisor felt that as long as the money is sent in US funds, there should be
no problem simply re-investing it with him.
Jxxxxxxxxx felt it would be good to check in with you to make sure there
isn't
something I do not know or have not been informed about.
Thanks in advance.
BXXXXXXXXXX
_________________________________________________________________
david ingram replies:
There is no tax liability to you in either country on the $500,000.
However, from the date of death until you receive the funds, interest or
dividends will be earned in Canada.
The estate (or the bank) should withhold 15% tax on any dividends and 10%
tax on any interest you earn and send this to the Canadian Government and
issue a NR4 slip to you reporting both the earnings and the tax withheld and
paid to Canada.
You, in turn, would put the amounts of income on your US schedule B and the
earnings and tax deducted on US form 1116 to claim credit for the taxes paid
to Canada.
If you are an executor with signing power on the estate, you also need to
file form T DF-90.22 for any Canadian account you have signing authority
over.  Failure to file the T DF-90.22 can result in a penalty of up to
$500,000 US PLUS 5 years in jail (worst I have seen was $60,000 and 6 months
in jail).  For some reason or other US CPA's seem to miss this form
regularly. The authority can be found in the two last questions at the
bottom of Schedule B of the 1040 return where they ask if you have signing
authority over a foreign account.  You may have already had signing
authority over your mother's accounts and should have been filling out the T
DF-90.22 forms already.
You can find and read the form and instructions at:
 http://www.irs.gov/pub/irs-fill/f9022-1.pdf
Good luck.  Your brother-in-law is one of my favourite people.
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, Fred Snyder of Dundee Wealth
Management and I, David Ingram  will be hosting an INFOMERCIAL but 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/>
Local calls are taken at (604) 280-0600 and Long Distance calls are taken at
1( 866) 778-0600
I do not know how far the LD line reaches.
=========================================
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