"Bryan Kellar" <bryan[at]oregontaxhelp.com> wrote:

- quote -

Actually moving the money from one account to another is
also probably a taxable event. The UK brokerage account is
presumably denominated in pounds while the US account is
presumably denominated in dollars. One of those would be
deemed to be the "functional currency" and one of them the
"nonfunctional currency." Whichever account is the
non-functional currency is treated sort of like a commodity.

Assume the US dollar is deemed to be the functional
currency. Assume further that the stocks in the brokerage
account are sold for $1,000,000 pounds and that on that day
the exchange rate is $1.80 US to 1 UK Pound. The basis of
funds in the account becomes $1,800,000. Assume that the
funds sit there for 1 month until the exchange rate is
$1.83, and are then transferred to the U.S. brokerage
account. At that point they would normally be converted
from pounds to dollars. The funds in the UK account
denominated in pounds are treated as a commodity with a
basis of $1,000,000 that is being exchanged for cash of
$1,830,000. This results in a $30,000 taxable gain. Under
section 988, the gain would be taxable as ordinary income.

Unless the sale in the UK account and the conversion to
dollars is simultaneous, there will likely be some tax
consequences to the movement of the funds from the UK
account to the US account.

Brian Bivona, CPA

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"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote:

- quote -

The sale would be a taxable event. Moving money or stock
from one account to another is not a taxable event for a US
resident, even from one country to another.

- quote -

Actual US citizenship will make no difference. US is going
by whether they are resident here if the taxpayer is a
foreigner. If he is living here, he is likely already being
taxed as a resident here. (meaning on a 1040, on his
worldwide income, etc.)

OTOH, if somehow he were a resident elsewhere, and had been
granted US citizenship overseas, then he would need to start
paying US tax at that time. But that is not the usual
situation.

- quote -

Yes, that would be the case.

Bryan

--
-------- Bryan Kellar, EA
Oregon Tax Help, Inc. Portland, Oregon
www.oregontaxhelp.com
www.canadatax.org

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"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote:

- quote -

No US consequence.

- quote -

Same as if he were not.

- quote -

I assume this is a resident for tax purposes, in which case
what he does has the same consequences as it does for you
and I.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Person has brokerage account in London. Lives in US but has
UK citizenship.

1. If he retains UK citizenship and transfers account to US
(sells and transfers), what is tax consequence?

2. If he becomes US citizen before selling and transferring,
what is tax consequence?

(My guess is that he owes US tax either way, but that if UK
also taxes, he gets an offset against US.)

-HW "Skip" Weldon
Columbia, SC

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