[thunder12]

I have a stock that is worth zero and would like to use it for this years tax. If it has no value and can't be sold how do you write it off. I'm told there is a way but no real facts to back it up so if I could get a clear answer I would appreciate if someone could simplify it for a regular working person,thankyou

 

[stardancer]

Couldn't find a specific CRA reference, but this is from Malin 2009

Shares of a Bankrupt or Insolvent Corporation:
You can elect a deemed disposition of the shares for nil proceeds if the company declares bankruptcy or becomes insolvent if at the end of the tax year any of the following apply-
- the corporation is in fact insolvent
- neither the corporation or a corporation which controls it is carrying on business
- the FMV of the share is nil
- it is reasonable to expect that the corporation will not commence to carry on business

You make this election by attaching a note to your return, stating that you elect to have subsection 50(1) of the ITA apply to the said shares. If you efile, the efiler has a place to note that the letter will be sent by mail. If no note is sent, the CRA "generally" accepts the inferred election.

You are deemed to have re-acquired the shares at a nil cost, so that if they ever come back and you do sell them for $$, you must report a capital gain.

 

[leslie]

Agreed

To get it off your broker's books you need to phone your broker. Each works differently. Some you just ask. Some you sign a form saying you give them the stock or sell it to them for a pennie, etc.

 

[ghostryder]

You can elect a deemed disposition of the shares for nil proceeds if the company declares bankruptcy or becomes insolvent if at the end of the tax year any of the following apply-
- the corporation is in fact insolvent
- neither the corporation or a corporation which controls it is carrying on business
- the FMV of the share is nil
- it is reasonable to expect that the corporation will not commence to carry on business

Not quite:

50. (1) Debts established to be bad debts and shares of bankrupt corporation — For the purposes of this subdivision, where

(b) a share (other than a share received by a taxpayer as consideration in respect of the disposition of personal-use property) of the capital stock of a corporation is owned by the taxpayer at the end of a taxation year and

(i) the corporation has during the year become a bankrupt (within the meaning of subsection 128(3)*),

(ii) the corporation is a corporation referred to in section 6 of the Winding-up Act that is insolvent (within the meaning of that Act) and in respect of which a winding-up order under that Act has been made in the year, or

(iii) at the end of the year,

(A) the corporation is insolvent,

(B) neither the corporation nor a corporation controlled by it carries on business,

(C) the fair market value of the share is nil, and

(D) it is reasonable to expect that the corporation will be dissolved or wound up and will not commence to carry on business

and the taxpayer elects in the taxpayer's return of income for the year to have this subsection apply in respect of the debt or the share, as the case may be, the taxpayer shall be deemed to have disposed of the debt or the share, as the case may be, at the end of the year for proceeds equal to nil and to have reacquired it immediately after the end of the year at a cost equal to nil.


So (unless you meet (i) or (ii) ) all 4 conditions must be met.

 

[thunder12]

these stocks have been $0.00 for quite sometime and I doubt they will ever trade again and look ripe for a capital loss. I was just looking at how if they are zero how to put that zero to drop income from other sources.If there are any more simple explanations I would gladly accept any info available out there. thank you

 

[Cal]

Call your broker, they will probably buy them off of you for one cent, giveing your your paperwork that you will need for tax time.

 

[Cal]

Million Dollar Journey wrote about this:

http://www.milliondollarjourney.com/claiming-capital-loss-from-a-delisted-stock.htm