First Global Data Ltd FGBDF

RE:Gift shares to broker for capital loss

[NYX2017]

Did anyone do this last year? With with broker?

NYX2017 wrote: There was a question in the Globe Investor newsletter the other day that applies to FGD situation, see below. 

I want to say that I'm NOT doing this, and I don't think it's a good idea, because I believe it will resume trading and believe in the future for the company, but some of you may be interested.

"Question: I have shares of a company that no longer trades. I would like to claim a capital loss on them. My discount broker advised me that I “hold some securities that may be subject to a Cease Trade Order (CTO). If you would like to remove them from your list of holdings, you may apply to gift each security to [the broker].” Should I do this?
 

Answer: If the shares are subject to a CTO, they can’t be easily sold. As a result, your broker is offering to let you transfer the shares by way of a gift to the broker, which would be considered a disposal at the fair market value (which could be zero). You could then claim a capital loss.

Note that for a company that has declared bankruptcy or a company that has ceased operations, is insolvent and it is reasonable to expect that the corporation will be dissolved or wound up, there is an election that can be made under the Income Tax Act where shares are treated as if they were disposed of for proceeds of zero.

The problem is that just because a CTO has been issued, it does not mean that the criteria for making the election have been satisfied. For instance, the shares may still have some value, or the company may still be carrying on operations. That’s why your broker’s solution seems to solve this problem. If you do not see the company rebounding, you may wish to take your broker up on its offer.

--John Heinzl"