Stock opportunity, what are the consequences?

Until now, I've had a very easy tax return situation.  However, I have been presented with a very small (any amount from £0 to <£2k) investment opportunity in an individual UK stock.  As a dual US/UK citizen resident in the UK, how complicated would my Aprils become if I made this stock purchase?  I'll skip it if it means a reporting nightmare, but I'd like to put at least £100 in just for the fun of it.

Until now, I've had a very easy tax return situation.  However, I have been presented with a very small (any amount from £0 to <£2k) investment opportunity in an individual UK stock.  As a dual US/UK citizen resident in the UK, how complicated would my Aprils become if I made this stock purchase?  I'll skip it if it means a reporting nightmare, but I'd like to put at least £100 in just for the fun of it.

Put it in an ISA and you'll have no trouble at all in the UK. As I understand it, as an individual stock,  it wouldn't be too difficult on the US side of things.

I expect there will be a lot of us taking advantage of the invitation! 

Individual stocks should not be a problem on a US return. The purchase price will have to be calculated in £s and the selling price in £s so exchange rate swings will probably be more volatile than the share price. I do this in reverse selling US shares.

Any dividends should be converted to £s on the date the dividend is paid out and will get the lower tax rate in the US as well as in the UK.

When completing the appropriate IRS forms then name the stock along with the ticker symbol.

Any HMRC taxes can be offset against IRS taxes on those same shares using a foreign tax credit.

Individual stocks should not be a problem on a US return. The purchase price will have to be calculated in £s and the selling price in £s so exchange rate swings will probably be more volatile than the share price. I do this in reverse selling US shares.

Any dividends should be converted to £s on the date the dividend is paid out and will get the lower tax rate in the US as well as in the UK.

When completing the appropriate IRS forms then name the stock along with the ticker symbol.

Any HMRC taxes can be offset against IRS taxes on those same shares using a foreign tax credit.

Thanks larrabee and Durhamlad!

Yes, larrabee, I suspect you are right.  Any of us who got the invitation will probably be checking it out.

Durhamlad: It's a UK stock, so the purchase (and eventual sell) price will already be in £s, as well as any dividends.  I assume you meant I'd need to convert to dollars for IRS reporting purposes? At what point would I make each conversion?  At the time of purchase and sell, and on receipt of dividends, or December 31 Oanda  rate, or some other calculation heretofore unknown to me?

I'll probably keep a spreadsheet for this, and I need to know what to track.

So far, I've only had to file 1040s and FBARs, as most of our assets are in my husband's name.  What additional IRS forms would this kick up?

Thanks larrabee and Durhamlad!

Yes, larrabee, I suspect you are right.  Any of us who got the invitation will probably be checking it out.

Durhamlad: It's a UK stock, so the purchase (and eventual sell) price will already be in £s, as well as any dividends.  I assume you meant I'd need to convert to dollars for IRS reporting purposes? At what point would I make each conversion?  At the time of purchase and sell, and on receipt of dividends, or December 31 Oanda  rate, or some other calculation heretofore unknown to me?

I'll probably keep a spreadsheet for this, and I need to know what to track.

So far, I've only had to file 1040s and FBARs, as most of our assets are in my husband's name.  What additional IRS forms would this kick up?

Sorry, I did mean convert to $s.  I use the actual date of the purchase and sale and I do keep a spreadsheet but the longer date shares that I had bought years before thinking about moving back I use XE.com which has historical exchange rate tables.

For dividends paid out you will need form 1099-DIV and the dividends from individual shares will be “qualified dividends” and on selling shares you will need form 1099-B to record the capital gains or losses. Non-qualified dividends come from bonds and those dividends are treated as regular income, just like interest from savings.

To claim back any foreign tax credits you would use IRS form 1116.

Or stick with your usual tactic and buy it in your husband's name in an ISA, although you'd loose the 5% bonus at the end of the year. Might be worth it to save the hassle though?

Or stick with your usual tactic and buy it in your husband's name in an ISA, although you'd loose the 5% bonus at the end of the year. Might be worth it to save the hassle though?

Durhamlad has put my mind at ease regarding complexity, so I'm going to do this myself (although*...).  But believe me, I was frustrated at the bit where it had to be in the member's name.  So annoying!  I don't want to give up the 5% bonus.

*  I did see this in the fine print: "If you need a nominee to hold your shares on your behalf, please get in touch with us to discuss."  But I'm not going to bother.