Capital Gains Tax on Estate

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2 yen
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Capital Gains Tax on Estate

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Are capital gains tax rates the same on estates as on regular capital gains while living?

i.e. On a stock sale while living, half the proceeds are included on a tax form for calculating capital gains taxes. Is this the same on stocks in an estate?

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Bylo Selhi
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Re: Capital Gains Tax on Estate

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2 yen wrote:Are capital gains tax rates the same on estates as on regular capital gains while living?
Yes.

There are related issue that arise with estates. If a spouse survives then the assets can be rolled over to that person on a tax-deferred basis. Then when the surviving spouse dies those assets finally become taxable. Because all assets are deemed to have been sold on death including RRSP/RRIF the estate's income is likely to be relatively high. This puts the estate into a higher tax bracket.
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Re: Capital Gains Tax on Estate

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Bylo Selhi wrote:
2 yen wrote:Are capital gains tax rates the same on estates as on regular capital gains while living?
Yes.

There are related issue that arise with estates. If a spouse survives then the assets can be rolled over to that person on a tax-deferred basis. Then when the surviving spouse dies those assets finally become taxable. Because all assets are deemed to have been sold on death including RRSP/RRIF the estate's income is likely to be relatively high. This puts the estate into a higher tax bracket.
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kcowan
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Re: Capital Gains Tax on Estate

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Bylo Selhi wrote:
2 yen wrote:Are capital gains tax rates the same on estates as on regular capital gains while living?
Yes.

There are related issue that arise with estates. If a spouse survives then the assets can be rolled over to that person on a tax-deferred basis. Then when the surviving spouse dies those assets finally become taxable. Because all assets are deemed to have been sold on death including RRSP/RRIF the estate's income is likely to be relatively high. This puts the estate into a higher tax bracket.
And if the death is anticipated, some of the holdings can be disposed of before death, splitting the tax burden between the decedent's final tax return and their estate tax return.
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DavidR
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Re: Capital Gains Tax on Estate

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kcowan wrote:And if the death is anticipated, some of the holdings can be disposed of before death, splitting the tax burden between the decedent's final tax return and their estate tax return.
But there is a deemed disposition at death, so all the gains up to date of death go on the final T1.
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kcowan
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Re: Capital Gains Tax on Estate

Post by kcowan »

DavidR wrote:
kcowan wrote:And if the death is anticipated, some of the holdings can be disposed of before death, splitting the tax burden between the decedent's final tax return and their estate tax return.
But there is a deemed disposition at death, so all the gains up to date of death go on the final T1.
Right! I was thinking about disposing of some capital assets across multiple years. De-registering a RRIF and taking CG in the same year can inflate the tax due.
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Re: Capital Gains Tax on Estate

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kcowan wrote:And if the death is anticipated, some of the holdings can be disposed of before death, splitting the tax burden between the decedent's final tax return and their estate tax return.
If the soon-to-be-deceased would like to donate part of the estate to charity there are tax-saving options, e.g.
1. Donate appreciated assets like stocks/mutfunds rather than cash. That way they avoid CG tax on the assets and get the same donation credit as with cash. (They also get thanked and/or otherwise recognized by the charity while they're still able to receive it personally.)
2. If they designate a charity as the beneficiary of an RRSP/RRIF in the plan's trust agreement as well as in their will the assets flow tax and probate free.
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Re: Capital Gains Tax on Estate

Post by Arby »

My late mother had a number of JTWROS investments with her adult children. On my mother's Final Return, I'm wondering how to allocate the capital gains for the deemed disposition of JTWROS investments on her date of death. Prior to my mother's passing, all income and all capital gains from the JTRWOS investments were allocated 100% to my mother's tax return. Can I continue to allocate 100% of the Cap Gain to my mother on her Final Return?
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Re: Capital Gains Tax on Estate

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Absolutely. That is what is what would be expected because assuming that your mother die not convey any beneficial ownership to joint account holders in the past, by virtue of claiming 100% of the income and cap gains, and by not crystallizing any cap gains in the past to joint account owners, continued to be the sole beneficial owner.
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