16b calculation

nelsona · Post by **nelsona** » Mon Mar 07, 2005 6:26 pm

<blockquote id="quote">quote:<hr height="1" noshade id="quote">Originally posted by rhollan

I wonder if there is a planning opportunity here: crystalize a loss while resident in the U.S. and do not elect to defer it. Could that loss be applied against other income (up to $3000 a year, filing jointly?) If it's an "all or nothing" approach, i.e. defer all gains and losses, or not, then one could elect to not defer when losses exceed gains, being selective about crystalizing both. (Of course, one has no control over mutual fund interest, dividend, and capital gain flow-through distributions, but large unrealized gains or losses offer a planning opportunity).
<hr height="1" noshade id="quote"></blockquote id="quote">

I quoted you as this was a past post.

Indeed under 89-45 such a thing was possible, but not quite to extent you ponder, as one was able to 'cherry-pick' which year one was under the rev proc and which year one was not. And of course, as with RP 02-23, ech RRSP account was treated individually, so one could account by account, create losses one year (unsheltered) and gains the next (sheltered).

That is no longer possible under RP 02-23, since the election is made once per acount and is irrevocable from then on.

That is why the instructions on 8891 specifically ask when one elected under 02-23 and not 89-45.

But one could, if one has one very bad RRSP account, simply choose not to elect until one has cashed all their losers, and then jump on the election bandwagon.

Remember, that a final relief is available to RRSP holders who have elected to defer if they do finally cash out all their RRSPs and find that they were left with less than what they had coming in: One can claim this as a final investement loss on schedule A, along with other miscellaneous deductions, subjectt o the 2% floor.

nelsona non grata