Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Does capital loss in year of death apply against other income for any year?
Position:
No, Applies only to year of death and immediately preceding year
Reasons:
wording of 111(2)
970179
XXXXXXXXXX C. Tremblay
Attention: XXXXXXXXXX
April 24, 1997
Dear Sirs:
Re: Capital loss application in the year of death
This is in reply to your letter of January 9, 1997, wherein you request our opinion with respect to the application of subsection 111(2) of the Income Tax Act (the "Act") to a hypothetical fact situation.
The situation that is described appears to involve a series of actual completed transactions. It is not our practice to give written opinions concerning completed transactions, as indicated in Information Circular 70-6R3. Although we are unable to provide any opinion in respect of the specific transactions described in your letter, we have set out some general comments which may be of some assistance.
Subsection 111(2) of the Act only applies to calculate taxable income for the year of death and the immediately preceding year. Net capital losses arising in years up to, and including the year of death and not previously deducted may be deducted in computing taxable income in either the year of death, or the previous taxation years to the full extent that taxable capital gains exceed allowable capital losses for that year. Any additional net capital loses not applied in this manner must then be reduced by the full amount of all deductions previously claimed in respect of the capital gains exemption under section 110.6 of the Act. The balance of net capital losses remaining can then be deducted in full in computing taxable income in either the year of death, the immediately previous year or a portion may be deductible in each year. There is no provision to apply the remaining balance, if any, anywhere.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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