Deed of Gift - Stocks no longer on the market

[calculoso]

I'm not sure if this is something that belongs here...

I was one of the unfortunate people who lost money in the Nortel business shut down, and I still have some worthless stocks on my account. How can I claim the capital loss on these stocks?

The stock brokerage was suggesting something called a Deed Of Gift, and searching online seems to suggest that I would have to amend my 2009 tax return

http://www.theglobeandmail.com/globe-investor/investor-education/my-shares-are-worthless-now-what/article16287668/

http://www.theglobeandmail.com/globe-investor/investment-ideas/more-fun-with-worthless-investments/article16397086/
I never claimed a loss for my 800 Nortel shares – definitely my worst investment! Is it too late?

No, it’s not too late. Nortel announced in 2009 that it would cease operations and sell off its assets, so you can retroactively amend your 2009 tax return to claim the loss, Mr. Quinlan said.

The capital loss would first be applied against any capital gains in 2009. If you have unused capital losses left over, you can carry them back three years or forward indefinitely to reduce capital gains in other years.

Does this sound right? Any gotchas to watch out for?

[Slava]

Sounds right to me, but basically this is more of an accountants question. I know capital losses can be carried back three years, but an accountant could tell you what the law is surrounding claiming that loss. Perhaps if Locke or another accountant reads this though, they can chime in and advise you.

[calculoso]

Thank you! I'll send Locke a PM and see if he can comment or if I should find a local tax accountant for help.

[Locke]

Okay, I've replied to your PM and I'll try and keep my reply brief.

Yes, for Nortel stock you can amend your 2009 tax return and accrue your Capital Loss, Revenue Canada will acknowledge that.

In order to do that you have to get the Deed of Gift from whomever your broker is. You're basically transferring responsibility for the stock to the broker and in turn washing your hands of it and as such booking the loss.

Then you can apply the loss to gains accrued in the interim.

The thing is, if you did these returns yourself the amendments can be difficult and potentially costly to prepare, so make sure that whatever tax savings you're going to get is really worth it.