Deemed Acquisition on Becoming Resident:
A taxpayer who becomes a resident of Canada at any particular time in a taxation year is deemed under subsection 48(3) to have acquired at that time each property owned at a cost equal to fair market value at that time. Property that is "taxable Canadian property" as described in paragraph 115(1)(b), or deemed to be taxable Canadian property because of an election under paragraph 48(1)(c), is excepted from subsection 48(3).
As a U.S. tax resident moving to Canada this year, what happens if the deemed acquisition cost is lower than the actual price of acquisition? Will I have randomly lost money? For instance:
- Jan 1st (USA tax resident) living in the USA: Buys $500,000 USD worth of stock.
- Aug 1st (USA/CDN tax resident) departure & arrival: The stock purchased for $500,000 USD is now worth only $300,000 USD.
- Dec 1st (CDN tax resident) living in Canada: Sells all stock for $1,000,000 USD.
Because of this deemed acquisition rule, will I have to pay capital gains on ($1,000,000 - $300,000) and incur a loss of $200,000 into thin air? Alternatively, is there a way for me to elect a higher "actual" cost basis? Can I claim the deemed acquisition as a loss with the IRS to recoup this amount?