Moving Losing Stock Into TFSA?

[Feruk]

I'm just wondering if you guys know of any issues with the following strategy: Say I bought 1000 shares of stock ABC for $6 each in a cash account. The stock has since gone to $4.95 but I believe there is a lot of potential to the upside. Can I then move my shares into my TFSA? I believe by doing this, I will:
(a) get to claim the capital loss (as moving into TFSA is a sell equivalent)
(b) not have to pay taxes on any gains I make upon sales of stock as it'll be in my TFSA

Does that sound right?

[rob the knob]

no.
any gain of this deemed disposition would be taxable, yet losses are not deductible.

[Feruk]

That makes no sense, care to elaborate?

[Euro_Trash]

In for an answer as I was wondering the same thing this morning. I was under the impression that you would lose the option to claim as a capital loss in doing so, but that would be great news if I was wrong.

Originally posted by rob the knob
no.
any gain of this deemed disposition would be taxable, yet losses are not deductible.

Why would the gain be taxable?

[Sugarphreak]

...

[Euro_Trash]

Originally posted by Sugarphreak
Isn't this about the same as selling the stock right now, then buying it under your TFSA banner?

That's what I thought transferring to the TFSA would be the same as, minus 2xcommision

[roopi]

The rules are the same as RSP's in this situation. If you transfer the stock in you would not be able to claim a capital loss. Simple solution is to sell the stock first and contribute the cash to your TFSA and then repurchase (you must wait 30 days before repurchasing to still claim the tax loss). You'll be out the commission and risk the stock going up in those 30 days.

[BrknFngrs]

The issue that I think you may run into here is "superficial losses" since you're essentially selling to crystalize a loss then immediately rebuying the same securities.

[roopi]

Originally posted by BrknFngrs
The issue that I think you may run into here is "superficial losses" since you're essentially selling to crystalize a loss then immediately rebuying the same securities.

By waiting 30 days before repurchase you avoid this and can still claim the capital loss.

[BrknFngrs]

Originally posted by roopi


By waiting 30 days before repurchase you avoid this and can still claim the capital loss.

Agreed, I didn't see your post when I initially responded and was referring only to the OPs proposed scenario.

On another TFSA note, there is another scenario I've been meaning to look into but haven't yet researched. Has anyone dealt with anything like the below:

2010:
- Individual contributes 10,000 to TFSA and invests it in stock
- In 2010 stock values declines to $5,000
- Individual withdraws $5,000 from TFSA (so balance is $0)

2011:
- Does the individuals TFSA contribution room get replenished by the $5,000 they actually withdrew in 2010 or the $10,000 (based on what the contributed value was originally before market conditions hit)

Logically I think it would only be replenished by the withdrawal amount ($5,000) and then they'd get there additional $5,000 in room for 2011 rolling around. That being said, that would mean that they've permanently lost $5,000 in contribution room... for the rest of their life

[e36bmw///]

nm

[tch7]

Originally posted by BrknFngrs

Logically I think it would only be replenished by the withdrawal amount ($5,000) and then they'd get there additional $5,000 in room for 2011 rolling around. That being said, that would mean that they've permanently lost $5,000 in contribution room... for the rest of their life

This. The $5000 contribution room is lost forever.

[roopi]

Originally posted by e36bmw///


Yes but he will repurchase the stock in his TFSA. Different account,

Should'nt have to wait 30 days

You still have to wait. It's the same person buying the same stock therefore you have to wait or else you could do this every year for tax loss selling by using 2 different accounts.

[Unknown303]

Originally posted by Feruk
That makes no sense, care to elaborate?

Nice trader rating.

[Feruk]

Originally posted by Unknown303


Nice trader rating.

Haha you can thank my buddy for that one.