Tax Loss Selling

In canada for 2010 because of the settlement period which has to be completed by the 31st of December you would have to make the sale by this Friday DEC 24th 2010 to meet the settlement requirements for making a tax loss.

The rest of the post is compliments of ....

MoneyinMetals.com

"Tax-Loss Selling
As the tax - year draws to a close, tax loss selling may be an opportunity you could use to your advantage. Instead of paying tax on capital gains accrued during the year, consider selling out below-water positions to generate offsetting losses. Only your net capital gain is subject to tax. Net capital losses may also be carried back three years or forward indefinitely to apply against net capital gains.

With tax loss selling, the selling transaction must settle before the last business day of the year. (The three day settlement period implies the deadline may be before Christmas Eve). Given the subtle differences between the ways Americans and Canadians can apply this practice, MoneyinMetals advises you to seek out professional financial and/or accounting advice before you do this.


Why would you want to generate a tax-Loss?


Most of our subscribers have considerable exposure to gold, silver, and other resources which have generally risen in value throughout the year. Where you have taken profits off the table, consider sheltering them with an offsetting capital loss. Why pay the government any more tax than necessary?

But what if you really like the stock, can you but it back?


Yes, as long as you are aware of the superficial trading rules (wash trades – in the US).
Superficial Loss Rules


If you sell a security to trigger a loss, and you or an affiliated person (for example, your spouse, a corporation you control, or a trust where you have a major beneficial interest, including an RRSP) purchases an "identical security" within 30 calendar days before or after the sale date, and that person still owns that security 30 calendar days after the sale date, then the capital loss is denied to you and added to the cost base of the person who bought it. This rule also applies if you or the affiliated person buys an option or a right to buy the security that was sold. For example, shares of competing companies within an industry should not be considered "identical securities," while index funds which track the same index would be considered "identical securities," for purposes of the superficial loss rules. In addition, professional tax advice will be needed to determine whether similar mutual funds are "identical securities." Please note that the capital loss will be denied if the buyer of the property is an RRSP under which the seller or seller's spouse (or common-law partner) is the annuitant. Therefore, swapping or contributing eligible securities to an RRSP will result in the denial of a capital loss, even though accrued capital gains would be taxable."""""""""""""""

GLTA Lostoutwest


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