superficial loss rules
1 - 8 of 8 Posts
Joined
·
465 Posts
A superficial loss occurs when you dispose of a property to trigger a capital loss, but then buy more of the same property within the time limits of 30 days before and 30 days after the sale.
The superficial loss would only apply to the 100 shares purchased on Oct 7, not to the other 200. When calculating the true loss on the first 200, you would use the average ACB of only those 200.
The loss on the Oct 7 shares cannot be claimed.
Hope this helps...
The superficial loss would only apply to the 100 shares purchased on Oct 7, not to the other 200. When calculating the true loss on the first 200, you would use the average ACB of only those 200.
The loss on the Oct 7 shares cannot be claimed.
Hope this helps...
If your sure about this you have made me extremely happy!!!! and a big virtual hug to you! god help me the thought of breaking the rule had me realy depressed.
This is really something new investors should be told, i only found out after the fact
This is really something new investors should be told, i only found out after the fact
Joined
·
450 Posts
I think i broke the rule!!!
all the same stock
Bought 100 june 16
Bought 100 july 16
Bought 100 Oct 7
sold 300 Nov 2 at a loss ( i guess i should have waited 30 days from the oct 7th buy??)
did i break the superficial loss rule and how do now claim the loss
I'm pretty sure that's wrong -- the superficial loss should only be for when you continue to hold some of the security after the sale. In this case since all the shares were sold, as long as you don't re-buy before Dec 2, you should be fine.
If you had bought 100 shares on Oct 7 and only sold 200, you wouldn't be able to claim the loss.
http://www.cra-arc.gc.ca/tx/ndvdls/.../lns101-170/127/lss-ddct/sprfcl/menu-eng.html
I am on the side of 'claim all the loss'. Most everying in the tax act is simple common sense applied to a presumption of fairness.
The point of the superficial loss rule is obvious. The technicality about buying the replacement shares before the fact instead of after, is just to catch people trying to get around the rule's intent. The stated 'solution' shows that you would not be caught. It says that the loss denied gets transferred to the replacement shares's ACB (so that when they are sold eventually you get to claim the loss). In your case you are not left with any replacement shares whose ACB can be adjusted.
Think of it as
1)triggering the superficial loss rules with the sale of the oldest 200 shares.
2)adding the loss denied to the replacement shares (that last purchase) to increase their ACB, and then
3) selling the last 100 shares purchased with their higher ACB and so regaining the loss denied.
The point of the superficial loss rule is obvious. The technicality about buying the replacement shares before the fact instead of after, is just to catch people trying to get around the rule's intent. The stated 'solution' shows that you would not be caught. It says that the loss denied gets transferred to the replacement shares's ACB (so that when they are sold eventually you get to claim the loss). In your case you are not left with any replacement shares whose ACB can be adjusted.
Think of it as
1)triggering the superficial loss rules with the sale of the oldest 200 shares.
2)adding the loss denied to the replacement shares (that last purchase) to increase their ACB, and then
3) selling the last 100 shares purchased with their higher ACB and so regaining the loss denied.
This is correct. The loss resulting from the 100 share portion of the Nov. 7th sale will be disallowed and added to the ACB of the security. The reason being that the stock was purchased with 30 days before the sale of the stock. The loss on the other 200 shares will be deductible (against other capital gains only).
Phil
"I think i broke the rule!!!
all the same stock
Bought 100 june 16
Bought 100 july 16
Bought 100 Oct 7
sold 300 Nov 2 at a loss ( i guess i should have waited 30 days from the oct 7th buy??)"
There is definitely no superficial loss. If you had sold less than 300 shares on Nov 2, there would have been a superficial loss.
This is from the CRA link that Potato sent. Read noting the "and" between the two conditions.
superficial loss can occur when you dispose of capital property for a loss and:
you, or a person affiliated with you, buys, or has a right to buy, the same or identical property (called "substituted property") during the period starting 30 calendar days before the sale and ending 30 calendar days after the sale; and
you, or a person affiliated with you, still owns, or has a right to buy, the substituted property 30 calendar days after the sale.
all the same stock
Bought 100 june 16
Bought 100 july 16
Bought 100 Oct 7
sold 300 Nov 2 at a loss ( i guess i should have waited 30 days from the oct 7th buy??)"
There is definitely no superficial loss. If you had sold less than 300 shares on Nov 2, there would have been a superficial loss.
This is from the CRA link that Potato sent. Read noting the "and" between the two conditions.
superficial loss can occur when you dispose of capital property for a loss and:
you, or a person affiliated with you, buys, or has a right to buy, the same or identical property (called "substituted property") during the period starting 30 calendar days before the sale and ending 30 calendar days after the sale; and
you, or a person affiliated with you, still owns, or has a right to buy, the substituted property 30 calendar days after the sale.
1 - 8 of 8 Posts
