RRSP cost basis for US taxation -
I have a RRSP to which both my late husband (Canadian) and
I (American) contributed while living in Canada. He died in 1995 and I
inherited his RRSP. I moved back to
the USA in 1996. I withdrew about 30% ($200,000) of the RRSP in 2007.
My accountant initially thought the cost basis in the RRSP would be the amount
contributions to the plan, but now she says that she can only include
my contributions, and not my husband's (since I filed US tax returns during
those years, but my Canadian
husband did not). Is this correct, or are there legitimate
alternative ways to calculate cost basis? I also had thought that perhaps
a "step up" in cost basis for my husband's
RRSP as of the date of his death might be possible, since he was not
a US citizen and therefore his RRSP would not have been subject to US tax if I
had not inherited it. This
is an important issue for me as there is still a significant amount
of money in the RRSP and I am considering withdrawals, but need to know how it
will be taxed first.
Thanks! If you can be of help to me I would surely
david ingram replies:
I am amazed. In the 45 years that I
have been in this business, this is the first time, this situation has come up
and I have likely been involved in several hundred deaths in several
situations similar to yours.
Only including your contributions makes no
sense to me whatsoever. If a form 8891 had been properly
completed completed each year (It did not exist until 4 years ago), both
his contributions AND yours would have been included. If you had followed
the rules in REV-PROC 89-45, both contributions would have been included.
Unless your accountant has a specific ruling or court case to the
contrary, I believe that both contributions should be included when calculating
the cost base.
This question was originally rejected by the system
but i happened to look at it while watching Larry King's coverage of Alaska
Governor's Sarah Palin's being added to the McCain ticket.
There was no
onus on your husband to report the payments to a spousal RRSP. The account
was yours once he made the contribution and since he was giving you less than
$100,000 per year, there was NO REASON FOR YOU TO FILL IN FORM 3520 on an annual
The net effect of the spousal RRSP was that he gave you $2,000,
5,000 or some other figure which was deposited to your account each year and
would have shown up as a deposit "IF" form 8891 had existed at the
In my opinion, all deposits made add to the adjusted cost base for
US tax purposes. However, I could be wrong and am answering this at 1:45
AM from memory without looking anything up. To make up for that, I am sending
this out to the list of about 13,000 people. Maybe, perhaps, someone else
will have a different opinion because of their own experience or
Now, as i
said that, you received this because i was up dealing with a private email
from the former head of a Canadian political party. This is what i was
writing about the picking of Sarah Palin as the V-P candidate.
This is the essence of the exchange between us with a couple of spelling
errors corrected and the names of some individuals left
Why Obama did not pick
Hilary is beyond me. However, it is also possible that he did and she said
"no" right at the start.
If and when he loses, she
has it (the democratic nomination) next time for sure and could then be
president four years earlier than being vice-president for eight
Besides, being Hilary and
the Senator from New York is likely better than being vice-president to
Obama. Few Vice-presidents have any real position out there, Mostly,
it is a ceremonial position 'until'.
Sarah Palin is a friend
of my old friends, XXXX and XXXXXX XXXX in Wasila, where she was the mayor.
They were active in the
oil drilling movement on opposite sides but still friends.
She and her husband are
also friends with XXXXX and XXX XXXXXXX, who I visited with in
Sarah's husband's being
the Alaska Snow mobile racing champion AND a union member is another big plus
for the election. They Palins are more 'common folk' than the democratic
ticket. Democrats with a right leaning bent, will love
That is an excellent assessment
David. I agree with everything you say, except the part about Hillary eventually
winning the presidency. She is done now. I believe the Palin pick has tremendous
depth and long term consequences for the US, but also the Dems. When McCain
finishes his term (and it will only be 1 term), Palin will become the first
female president of the US. Americans will never elect a leftist black or
leftist woman as president, but they will (and want to) elect a woman or black
as president, so long as they love America, and don't believe it must be
completely changed, as Clinton and Obama do.
The Democrats will be so
demoralized by the loss of Obama, they will implode. They are closer to the NDP
now than they are 'liberal', and they are a spent force politically. If they
ever nominate a Jack Kennedy type - pro-life, pro traditional marriage, they
might have a chance with middle America. But if they remain the party of Michael
Moore and Nancy Pelosi, they will only elect people in California and New
I should have known you would know
someone close to Palin. I told someone once that the 6 degrees of separation for
most people is reduced to 2 or 3 degrees for David Ingram. XXXX
Well, I agree partly
However, I see a McCain
win and one term as you suggest although Regan went two.
I see a Hilary <>
Palin battle taking place in 2012 with Hilary winning, not Palin.
I think that Hilary stood
a good chance against McCain if she was the presidential nominee because she
would get the Democrats by default AND the left leaning
If zero is extreme left
and 100 is extreme right, I put Obama at 30, Hilary at 45, McCain at 60 and
Palin about 60 as well.
The pro-lifers will love
Palin because of their decision to go through with the birth of a Downs Syndrome
However, the US still
needs universal health care. They will not get it with McCain and
Four years from now, if
Hilary is still in the picture and wants to run, she has a better chance than
In this election, Hilary
is to Obama what McCain was to George Bush last time.
Forget about the
SUB-PRIME Loan bust in the US.
75% of bankruptcies are
caused by medical bills.
and of those, 75%
"had" medical insurance which capped out too low.
I will send you
something I got from Michael Moore today.
The good part i guess
is that I have to live four and a half more years now to see what
am putting in my old age pension application. Can you believe it? I
hit 66 on Sept 3. Sheesh! could have put it in a year ago, but I can
also get one year retroactive so if i do no want to lose a month, it goes in
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