The question has come up whether a Canadian RRSP (similar to an IRA or
401(k)) account that holds cryptocurrency, needs to be reported on Form
1040 as a "financial asset." I know they need to be reported on the
FBAR and Form 8938. But on the 1040?

My thought is that they don't. According to the IRS such accounts are
treated the same as an IRA or 401(k) and not considered taxable until
the money is withdrawan. But I haven't been able to find anything
dealing with this one particular point.

Any information would be appreciated.


--
Stu
http://DownToEarthLawyer.com

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On Thursday, June 15, 2023 at 1:46:37 PM UTC-7, Stuart O. Bronstein wrote:

The question has come up whether a Canadian RRSP (similar to an IRA or 401(k)) account that holds cryptocurrency, needs to be reported on Form
1040 as a "financial asset." I know they need to be reported on the
FBAR and Form 8938. But on the 1040?

My thought is that they don't. According to the IRS such accounts are
treated the same as an IRA or 401(k) and not considered taxable until
the money is withdrawan. But I haven't been able to find anything
dealing with this one particular point.

Any information would be appreciated.

--
Stu
http://DownToEarthLawyer.com

Under the treaty, the RRSP is considered a pension. As such, one does not need to answer Yes to the 1040 question on cryptocurrency. As transactions inside a pension are not reported I see no reason why anything would show up on a 1040 until such time
there is a distribution from the RRSP. The treaty says the US resident reports the taxable amount based on what would have been taxable if the person was a Canadian resident. Canada reserves the right to tax the distribution (this would trigger an FTC
on the US return) but at a rate no higher than 15%.

So effectively, only the FBAR and the 8938 would have to be filed to disclose the foreign account.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

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Alan <tempuser@vacationmail.com> wrote:

Stuart O. Bronstein wrote:

The question has come up whether a Canadian RRSP (similar to an
IRA or 401(k)) account that holds cryptocurrency, needs to be
reported on Form 1040 as a "financial asset." I know they need to
be reported on the FBAR and Form 8938. But on the 1040?

My thought is that they don't. According to the IRS such accounts
are treated the same as an IRA or 401(k) and not considered
taxable until the money is withdrawan. But I haven't been able to
find anything dealing with this one particular point.

Any information would be appreciated.

Under the treaty, the RRSP is considered a pension. As such, one
does not need to answer Yes to the 1040 question on
cryptocurrency. As transactions inside a pension are not reported
I see no reason why anything would show up on a 1040 until such
time there is a distribution from the RRSP. The treaty says the US
resident reports the taxable amount based on what would have been
taxable if the person was a Canadian resident. Canada reserves
the right to tax the distribution (this would trigger an FTC on
the US return) but at a rate no higher than 15%.

So effectively, only the FBAR and the 8938 would have to be filed
to disclose the foreign account.

Thanks Alan. That was my conclusion too. But while I deal with a
lot of tax issues, I don't do returns, so I wanted the perspective of
someone who is close to this issue.

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

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