Capital Gains and Losses Flashcards
What are the terms (CG, CL, BIL) when recorded at 50% value
Taxable Capital Cains
Allowable taxable loss
Allowable business investment loss
Capital gain formula
Proceeds of disposition- (Adjusted cost base-Expense of disposition)
How long can capital gains be carried
If cannot be used in the current year:
Carry-forward indefinitely
or
Carried back to the previous three years.
How to calculate proceeds of disposition
- Sale price of property sold (ITA 39 (1) & 54)
- Compensation for property
Unlawfully taken
Destroyed
Expropriated
Damaged
4 types of deemed disposition
- Gift (ITA 69 (1)(b)) POD = FMV @ sale date
- Change in use (ITA 45(1)) POD = FMV @ time change
- Giving up Residency (ITA 128.1) POD = FMV @ cease Canadian Residency
- Death (ITA 70(5)) POD = FMV @ date of death
CAPITAL GAIN RESERVE: if not receiving all proceeds this year
Max reserve under ITA 40 (1) (a) (iii) is lesser of:
The reserve is calculated as (AR/Proceed) multiplied by the CG.
1/5 x (4 minus # of preceding tax years ending after disposition)
Add into income CG reserve from previous year
V PRINCIPAL RESIDENCE DEDUCTION
is
1 plus # of tax years ending after the acquisition date where property is elected as a principal residence and was resident in Canada
5 Limited Personal Properties
Losses an only be used against LUP
Works of art (painting, etchings, drawings, prints or sculpture)
Jewelry
Rare folio, manuscript or book
Stamps
Coins
Limited Personal Properties can be carried forward/back for:
If gain result, any losses from LPP for 7 immediately preceding years and 3 following years may be deducted
Eligible Small Business Investments
Can defer recognition of the gain if:
Proceeds are used to reinvest in another eligible small business (ITA 44.1) New investment must be treasury shares:
Deferred capital Gain decreases ACB of new treasury shares
superficial loss
within 30 days before or after the disposition plus still owns the property
ACB of asset increases by
superficial loss
