Capital gains - US transactions & USD accounts

[moneybyte]

Calculating capital gains on direct transactions ignores what happens to cash in the account over the years. How does one generally go about doing this? Up to now, I've calculated cap gains as if the money were converted to CAD at buy and sell times regardless of whether any money was transferred in our out of the account. Since CAD is appreciating against USD, I should be accounting for the cash but without a transaction, how can one do this? Or can it only be done at some point in the future when the account is collapsed?
Thanks in advance.

[caricole]

moneybite....Or can it only be done at some point in the future when the account is collapsed?

I think you answered your own question

It could not be done otherwise

Lets say you converted 100K Can tu 75K U/S at 0,75 exchange rate 7 years ago ???

Today you collapse 99K U/S to 99K CAN exhange rate AT PAR

At first glance 1K capital loss on conversion......exept

Before coming to the 99K U/S of today...you have to take into account all capital gains and losses declared on the interim years, plus all amount direcly deposited into the account like U/S dividends

If during the interim years you have deposited or retrieved some capital from this account, it becomes a nightmare....because these sums dont make part of the STARTING VALUE, or the FINISHING VALUE and have not been declared in any prior incometax declaration

If you opened the account in a year of LOW VALUE CANADIAN DOLLAR, and now convert in a year of HIGH VALUE CANADIAN $...you could end up with a capital loss on conversion, even if it shows a capital gain on U/S $ at the beginning 75K and U/S $ at the end 99K

But the capital gains and losses in U/S $ have been taken care of in previous taxyears

my opinion

[moneybyte]

Hi Caricole, thanks for your thoughts. It sure looks like i gave myself a nightmare! Several withdrawls plus, by doing it the way I did, the change in exchange rate is partially accounted for - but to an unknown degree. I suppose one could try to treat every stock purchase as a sale of dollars and stock sale as a purchase of dollars and try to account for the exchange rate for each transaction (even though the number of dollars is different???) Gives me a headache just thinking about it but it seems to be the only way to identify a transaction without waiting for years and years.

But you are right about the exchange loss canceling capital gains - so why am I paying tax on the gains unless they exceed the loss on the whole account? I'm no genius when it comes to trading anyway and it seems to have landed me in the taxpaying soup! Looks like I should maybe quit trying to have a US account although I do like the platform.

I'll ask the broker for their opinion tomorrow on what they think can/should be done. Surely I can't be the only person to be grappling with this issue so I'm still hoping somebody has a brainwave on this.