Written on February 5, 2013 – 7:00 am | by Steven Frye
As executor, you are going thru the deceased’s belongings and personal papers. Lo and behold, you find what looks like an old stock certificate in a desk drawer for a company you have never heard of. You don’t ever remember the deceased saying anything about this stock certificate. As the executor what can you do?
As described in previous blogs, the deceased is deemed to dispose of all assets at fair market value on death. Therefore if the corporation is still in existence, the gain or loss can be claimed on the final return. You will likely need some assistance with details (acquisition cost and date, current value, prior tax claims etc.) to determine if there is indeed a gain or loss to claim.
If the stock certificate has been sitting in a drawer, chances are the corporation was dissolved some time ago and if that’s the case, it is deemed that the loss would have been realized in the year of dissolution. If you can determine when the company was dissolved and the loss has not been claimed already (that is you can’t find it on previous years tax returns), what next?
The Canada Revenue Agency (CRA) in a recent roundtable discussion with professionals was asked this same question. They confirmed that you as executor can ask CRA to apply the loss to gains in one of the past 10 years.
If the unclaimed loss is outside the 10 year period, it cannot be carried forward if there were gains in a year outside of the 10 year period that would reduce the losses.
Nevertheless, if the circumstances are right and with some additional due diligence, an otherwise bad investment made during a lifetime could lead to some tax relief after death.
Thanks for reading