RE: RE: Azimut summarizes 2007 progress and growthCanada. Summarizing: You can sell stock before year end at a loss and put those losses against any capital gains you have for the same year and pay less(or no) tax on the gain. People do this even with stocks they really like just to get the tax loss and then try to buy it back as soon as possible afterwards. BUT you may not buy that stock back within 30 days of the sale or the loss is disallowed and you have to pay tax on all your gains. Also you may not have right up to the 31st to do it because of the few days it takes a trade to settle. This is why I think the stock price is soft right now (people waiting for all the tax loss sellers to sell) and that there will be more buying back by the tax loss sellers and everyone who wants to get this at a bargain before the price goes back up. Just my guess.
ET
How do you use a capital loss?
You have a capital loss when you sell, or are considered to have sold, a capital property for less than its adjusted cost base plus the outlays and expenses involved in selling the property.
For information on calculating your capital gain or loss, see How do you calculate your capital gain or loss?
Generally, if you had an allowable capital lossin a year, you have to apply it against your taxable capital gain for that year. If you still have a loss, it becomes part of the computation of your net capital lossfor the year. You can use a net capital loss to reduce your taxable capital gain in any of the three preceding years or in any future year.
Unused 2006 net capital losses can be carried backto 2003, 2004, and 2005 without adjustment, but if unused net capital losses of other years are carried forwardand applied to your 2006 taxable capital gains, you have to determine your adjustment factor, because the inclusion ratemay have changed.
Our Summary of loss application ruleschart indicates the rules and annual deduction limit for each type of capital loss.
What is a superficial loss?
A 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.
If you have a superficial loss in 2006, you cannot deduct it when you calculate your income for the year.
However, if you are the person who acquires the substituted property, you can usually add the amount of the superficial loss to the adjusted cost base of the substituted property. This will either decrease your capital gain or increase your capital loss when you sell the substituted property.
In certain situations, when you dispose of capital property, the loss
may not be considered a superficial loss.