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Discussion Starter · #1 ·
TD DI keeps reminding me that I have some stocks that have ceased trading. Do most people relinquish their shares when this happens?

i never claimed the loss when they stopped trading as I didn’t understand the rules when younger and wasn’t paying attention. These are dot coms + Nortel.
 

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I usually hang onto mine for a while hoping for some sort of miracle, and then eventually give up and relinquish them to TD.
 

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i never claimed the loss when they stopped trading as I didn’t understand the rules when younger and wasn’t paying attention. These are dot coms + Nortel.
It sounds like a not insignificant capital loss. Why haven't you written it off?

You can claim the loss without giving up the shares, just in case of miracles. Taxtips explains how.

Alternatively, you can surrender them to TD so you are no longer reminded of your investment folly. ;)
 

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Discussion Starter · #4 ·
It sounds like a not insignificant capital loss. Why haven't you written it off?

You can claim the loss without giving up the shares, just in case of miracles. Taxtips explains how.

Alternatively, you can surrender them to TD so you are no longer reminded of your investment folly. ;)
I thought you had to claim the loss in the year it occurred…..not many years later when you actually dispose or surrender them.
 

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I thought you had to claim the loss in the year it occurred…..not many years later when you actually dispose or surrender them.
My understanding is it's an "unrealized loss" until you actually dispose of it. I went through that with one company, had it sitting there for a few years, long after it ceased trading. I went through all the paperwork and got the pittance from the class action before I actually did the paperwork and relinquished the shares. I then claimed the loss against gains for the year.
 

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Discussion Starter · #7 ·

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Hmmm….not sure. see attached. Under scenario 1, it seems you need to account for the loss in the year it becomes worthless. Under scenario 3, it seems you may be able to account for the loss once the shares are relinquished to the broker.

https://ca.rbcwealthmanagement.com/...high.pdf/f086e8ef-2463-4bb1-b25f-4a73c7dbbe05

Interesting. I'm no tax expert but I am curious about this issue.

I note two factors that suggest it may not be necessary to relinquish the shares in order to claim a complete loss for tax purposes.

1) Note that in both links you provided, as well as the CRA tax folio (section 1.21, b), iii), the phrasing for the third option is "be insolvent" or "is insolvent" -- not "became insolvent that year." Isn't Nortel currently insolvent? Consequently, couldn't one claim a total loss in this tax year?

2) In the tax folio link above, also look at section 1.25. It says the CRA will consider late filings up to 10 years after the tax year in which the election for a loss was due. Nortel went defunct in 2013, so ISTM one could still claim the total loss via a late filing.

For you, the easy thing to do is just hand over the value-less shares to your brokerage; the claim for a total loss is thus clearly eligible in this tax year.

Years back, I claimed an Allowable Business Investment Loss on an investment in a restaurant started by my brother. In the case of his business, it took a while for bankruptcy/insolvency to be determined. (He defaulted on his bank loan but continued to negotiate with the bank. Eventually they struck a repayment agreement that recouped the bank something like 50 cents on the dollar.) I can imagine other scenarios where it is not black and white when a company becomes bankrupt or insolvent.
 
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