Estate Information Return

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NeilB
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Estate Information Return

Post by NeilB »

Hello,
I'm a long time follower of the forum but this my first post. I hope I've put in the right place.

As an executor of my mother's estate, I have to complete the "Estate Information Return" (I'm in Ontario).

The EIR requires detailed information about each of my mother's investment. She held various stocks and bonds. I have to give Fair Market Values for each individual holding at the Date of Death. My mother died on a Sunday.

I have three main questions:
1. How do I determine the FMV for each stock she held? I assumed it would be the "closing price" on the Friday before her death. Is this correct?

2. How do I determine the FMV for each bond she held? She had a mix of corporate and provincial bonds.

3. Where can I find historical daily data for corporate and provincial bonds?

Thanks for any help.
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Norbert Schlenker
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Re: Estate Information Return

Post by Norbert Schlenker »

Welcome to (writing at) FWF. Condolences on your mother's death.

Except in extraordinary circumstances, t's perfectly reasonable to use Friday's closing stock price if you're required to estimate FMV on the following Sunday. If something bizarre happened on the Monday (market crashes 30% e.g.), then you could make an argument for adjustment. As your mother's death is likely recent, and we haven't had anything resembling that, just use the Friday close.

Pricing the bonds could be an issue if they're held in registered form, i.e. there are certificates in a safe deposit box or a desk. If they're at a broker, just ask the broker for an account valuation as of the date of death. Any broker can supply that at the drop of a hat.

Your request for historical pricing data on the bonds is unusual. Why do you need that? I can imagine not having good cost records, but that usually means both "I don't know when I acquired them" and "I don't know what I paid". Knowing the price on any particular day isn't much use if you can't be sure of which day you want.
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Re: Estate Information Return

Post by NeilB »

Thanks for the help Norbert.

The bonds were/are held in my mother's self-directed trading account at TDDI.
I have been communicating with the estate department at TD, trying to get FMV values for each holding (bonds or otherwise). They have, so far, only been willing to provide me with a total FMV for the account. I'm not sure why.

I though if I could find a source for daily historical bond prices, I could determine their FMV for the Friday before my mother's death. 'Webroker" provides historical data for stocks but not bonds (as far as I can tell).

Neil
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AltaRed
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Re: Estate Information Return

Post by AltaRed »

That is an intolerable response from TDDI. Don't accept that for an answer. That said, I suspect CRA will likely accept an average of what is shown month end in the 2 monthly account statements, i.e. the one just before death and the one just after death. Ultimately, they just want overall taxes paid.

When I handled my mother's estate, RBC DI gave me a FMV for every single asset in my mother's accounts, including accrued interest on GICs. That way, i was able to put accrued GIC interest on the Final T1 Return, and interest thereafter until cyrstallization on the T3 Trust Return.
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Re: Estate Information Return

Post by Peculiar_Investor »

AltaRed wrote: 03 May 2017 10:54 That is an intolerable response from TDDI. Don't accept that for an answer.
I would agree and I'd push back on them. The estate department should understand the requirement comes from CRA and therefore I would have expected they would have simply provided the needed information. As Nobert states "Any broker can supply that at the drop of a hat."
AltaRed wrote: 03 May 2017 10:54 That said, I suspect CRA will likely accept an average of what is shown month end in the 2 monthly account statements, i.e. the one just before death and the one just after death. Ultimately, they just want overall taxes paid.
I was thinking along the same line as a reasonable approximation method to be used for FMV of the bonds.
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Norbert Schlenker
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Re: Estate Information Return

Post by Norbert Schlenker »

They have, so far, only been willing to provide me with a total FMV for the account. I'm not sure why.
Laziness.

However, you don't need the detailed info for the estate information return...
The Guide wrote:Where investments listed above, including any cash, are held in an account with an adviser, dealer, financial institution or other person who holds the assets on behalf of the deceased, you only need to provide the name and contact information of the institution or person holding the asset along with the account number and the total value of all of these assets held in the account at the date of death; in that case, you do not need to enter details of each individual asset held in the account.
CRA will not be as understanding next April.
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Re: Estate Information Return

Post by NeilB »

Thanks everyone for the great responses.
AltaRed wrote: 03 May 2017 10:54 That is an intolerable response from TDDI. Don't accept that for an answer. That said, I suspect CRA will likely accept an average of what is shown month end in the 2 monthly account statements, i.e. the one just before death and the one just after death. Ultimately, they just want overall taxes paid.

When I handled my mother's estate, RBC DI gave me a FMV for every single asset in my mother's accounts, including accrued interest on GICs. That way, i was able to put accrued GIC interest on the Final T1 Return, and interest thereafter until cyrstallization on the T3 Trust Return.
For the bond values I was intending to err on the side of caution by using the higher of the market values from the 2 monthly statements. The difference is small.
Norbert Schlenker wrote: 03 May 2017 11:08
They have, so far, only been willing to provide me with a total FMV for the account. I'm not sure why.
Laziness.

However, you don't need the detailed info for the estate information return...
The Guide wrote:Where investments listed above, including any cash, are held in an account with an adviser, dealer, financial institution or other person who holds the assets on behalf of the deceased, you only need to provide the name and contact information of the institution or person holding the asset along with the account number and the total value of all of these assets held in the account at the date of death; in that case, you do not need to enter details of each individual asset held in the account.
CRA will not be as understanding next April.
I guess I need to get new reading classes. I looked at the guide several times and never picked that out. Perhaps that is how TD justifies their laziness. Still I will need to keep hounding them as I will need the details to work out capital gains for my mother's final Income Tax Return(s).
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Re: Estate Information Return

Post by Arby »

I have a few questions regarding the Final Return for my mother. My mother had a number of joint investments with each of her adult children. Each investment was joint with one child. The income from the joint investments was 100% attributed to Mother on previous tax returns. After her death, the joint investments were transferred to each joint child, and then subsequently each child sold their investment. My questions relate to reporting the investment income and capital gains for the joint investments.

For income generated by the joint investments, I have assumed the following:
- prior to DOD, any income is 100% reported on the Final Return (consistent with previous years tax reporting)
- after DOD, any income is 100% reported by the child

For Capital Gains generated by the joint investments, I have assumed the following:
- the Final Return reports any Capital Gains based on the deemed disposition at DOD
- any Capital Gains after the DOD are reported by the child. The Capital Gain is calculated based on ACB of the investment on the deemed disposition at DOD.

Are my assumptions correct?
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Re: Estate Information Return

Post by OnlyMyOpinion »

Arby, I'm assume we're talking the T1 Final, not the Ontario EIR?
If so, what you describe is the way I divided it - except in my case, post-DOD was attributed to the estate, not to the 'child' (the joint acc holder).
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Re: Estate Information Return

Post by AltaRed »

I agree with Arby on the basis that right after the DOD, the surviving joint (undivided interest) account owner(s) own the investment exclusively. My assertion is the only thing that really happened was that the deceased was effectively taken off as a co-owner of the account the day after the DOD, regardless of how the FI actually handled it, i.e. kept the same account number or moved it to an existing account of the surviving joint owner(s).
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Re: Estate Information Return

Post by OhGreatGuru »

Arby is correct. The only complication is that the financial institutions do not issue separate T3 & T5 for before/after DoD. About all you can do is prorate it and include an explanatory note in each return. As long as it is all reported by somebody, CRA seems to be satisfied.
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Re: Estate Information Return

Post by twa2w »

AFAIK, most financial institutions are happy to provide T 3's and T5s to date of death on an estate.
All you have to do is ask.
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Re: Estate Information Return

Post by Arby »

Thanks to everyone for their comments.
The financial institutions did provide me with a valuation of the investments on DOD. I never thought to ask for T3's and T5's as of the DOD. I'll followup on this.
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Re: Estate Information Return

Post by OhGreatGuru »

twa2w wrote: 26 Mar 2019 22:36 AFAIK, most financial institutions are happy to provide T 3's and T5s to date of death on an estate.
All you have to do is ask.
Well, RBC wouldn't do it for me for my father's estate.
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Re: Estate Information Return

Post by Arby »

I'm in the process of completing the Final Return for my mother, who passed in August 2018. The market was at a high point on her Date of Death, and because of the deemed disposition at DOD, there will be significant capital gains (and significant taxes due) on the Final Return.

We sold all the holdings in the Estate portfolio in November 2018 and went to cash in the portfolio. The market had dropped significantly since the DOD, and as a result, the Estate T3 Trust Return will show significant capital losses. Can the losses on the T3 Trust Return be retroactively carried back to offset the capital gains on the Final Return? Or alternately, can the capitals gains on the Final Return be carried forward to the T3 Trust Return?
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Re: Estate Information Return

Post by OnlyMyOpinion »

Arby wrote: 09 Apr 2019 15:40... Can the losses on the T3 Trust Return be retroactively carried back to offset the capital gains on the Final Return?
Yes. I made further comments in this thread 29-Oct-2018:viewtopic.php?f=32&t=114520&hilit=T3+GRE&start=25

We had the same scenario. Sent both the T1 Final and T3 GRE in a couple of weeks ago. Cover letter on each, copy of each return included with the other for their records, cheque for the balance due on each (before the loss transfer adjustment). CRA's MyRep says the T1 Final NOA will be available Apr.18. I assume nothing will show up online for the T3, that it will be by snail mail. Should eventually get a refund to the estate after the adjustment has been processed.
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Re: Estate Information Return

Post by Arby »

Thank you OnlyMyOpinion. Your post will save me many hours of research.
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Re: Estate Information Return

Post by Arby »

Is there any tax payable when liquidating a TFSA held by the deceased person, when there is no named beneficiary for the TFSA. I know capital gains earned on investments in a TFSA are generally not taxable, but does that also apply to the Final Reurn and the T3 Trust Return? Do I need to report any capital gain/loss on the deemed disposition of the TFSA at Date of Death?
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Re: Estate Information Return

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Arby wrote: 12 Apr 2019 11:53 Is there any tax payable when liquidating a TFSA held by the deceased person, when there is no named beneficiary for the TFSA. I know capital gains earned on investments in a TFSA are generally not taxable, but does that also apply to the Final Reurn and the T3 Trust Return? Do I need to report any capital gain/loss on the deemed disposition of the TFSA at Date of Death?
There is no tax of any kind owing on the Final T1 Return for a TFSA as of DoD. However, with no legitimate successor beneficiary named (e.g. spouse), anything earned post DoD is a taxable event because the TFSA is deemed to have been dissolved at DoD. That would be included in the T3 trust return and either paid by the trust or passed through via T3 tax slips to the estate beneficiaries.
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Re: Estate Information Return

Post by OnlyMyOpinion »

No, TFSA's come into the estate without taxes to either the deceased (T1) or the estate (T3GRE).

I suppose the proceeds might earn interest once the cash is in the estate acc. But that would apply to earnings within the estate from any source.

+1 to AR's added detail. In our case the TFSA actually lost some value from dod to coming into the estate acc. That (small) loss can't be recovered.
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Re: Estate Information Return

Post by Arby »

Following is a link to a good explanation about the Rights and Things tax return. Too bad CCRA couldn't explain their forms in such a simple and understandable format.
https://www.fbc.ca/knowledge-centre/use ... income-tax
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Re: Estate Information Return

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OnlyMyOpinion wrote: 09 Apr 2019 15:56
Arby wrote: 09 Apr 2019 15:40... Can the losses on the T3 Trust Return be retroactively carried back to offset the capital gains on the Final Return?
Yes. I made further comments in this thread 29-Oct-2018:viewtopic.php?f=32&t=114520&hilit=T3+GRE&start=25

We had the same scenario. Sent both the T1 Final and T3 GRE in a couple of weeks ago. Cover letter on each, copy of each return included with the other for their records, cheque for the balance due on each (before the loss transfer adjustment). CRA's MyRep says the T1 Final NOA will be available Apr.18. I assume nothing will show up online for the T3, that it will be by snail mail. Should eventually get a refund to the estate after the adjustment has been processed.
When carrying back losses from the T3 Trust Return to the T1 Final Return, did you use a T1 Adjustment Request form?
In the T1 Adjustment Request form, what did you enter in "Part C Adjustment Details": a new entry for "Line 253 - Net Capital Loss of Other Years", or a reduction to "Line 127 - Taxable Capital Gains"?
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Re: Estate Information Return

Post by AltaRed »

When I did a 164(6) election, I did it at the same time as I filed the original Final T1, not afterwards as you say you are doing. In my case, I used the Tax Tip at the bottom of this quote from the T3 Trust Guide,
Graduated rate estate elections (losses)

For 2016 and subsequent tax years, if you are a legal representative administering the graduated rate estate of a deceased person, you may:

elect under 164(6) to treat certain capital losses and terminal losses, arising in the first tax year of the deceased person’s graduated rate estate, as losses of the deceased person for that person’s final tax year
elect under 164(6.1) to carryback certain amounts relating to employee stock options, arising in the first tax year of the deceased person’s graduated rate estate, to be deducted in computing the deceased person’s income for that person’s final tax year

Prior to January 1, 2016, these elections were available to all estates. However, effective January 1, 2016, these elections are only available to an estate that is a graduated rate estate.

These elections apply only to the first tax year of a deceased person’s estate. The elections do not affect the return of the deceased person for any year before the year of death.

Due date of election and amended final T1 return

In addition to filing the election you are also required to file an amended final T1 return of the deceased person to give effect to the rules. Both the election and amended final T1 return must be filed by the later of:

the filing due date of the deceased person’s final T1 return that the legal representative is required to file or has elected to file
the filing due date for the estate’s T3 return for its first tax year

When filing the amended T1 return, you must clearly identify the amended final T1 return of the deceased person as a 164(6) election or a 164(6.1) election.

164(6) election

Generally, you can make this election for:

all or any portion of the capital loss (to the extent the graduated rate estate’s capital losses exceed its capital gains) resulting from the disposition of the graduated rate estate’s capital property as reported on Schedule 1
all or any portion of the terminal loss (not exceeding the total of the graduated rate estate’s non-capital loss and farm loss before the election) resulting from the disposition of all of the depreciable property of a prescribed class of the graduated rate estate

If you are making an election under 164(6) for the graduated rate estate, attach the following to the T3 return:

a letter indicating that you are making an election under 164(6) and providing all of the following information:
the amount of the capital loss you elect to be a capital loss of the deceased person
the amount of the terminal loss you elect to be deductible in computing the income of the deceased person
a schedule with details of the capital loss
a schedule with the details of the terminal loss and a statement of the amounts that would have been the non-capital loss and the farm loss of the estate for its first tax year had the election not been made

The graduated rate estate cannot claim a loss that you have elected to transfer to the deceased person's final T1 return. However, you have to report the dispositions of the estate property on Schedule 1. If the total is a loss, enter the amount elected under subsection 164(6) on line 19.

Tax tip

If you know you want to apply a loss to the deceased person’s final T1 return before that return is due to be filed, you can submit a request to apply the loss with the return. Clearly identify the return as a 164(6) election. Although we will not allow the claim on the initial assessment of the T1 return, we will hold your request until we assess the T3 return and verify your claim. If we accept your claim, we will adjust the T1 return, and issue a notice of reassessment.
In essence, I filed a copy of the letter I generated for the T3 Trust return with the Final T1 return. As the above Tax Tip paragraph says, they did not include the election in the first assessment of the Final T1. They re-assessed it some 12-18 months later.

In your case, I might do as you suggest, i.e. a new entry for Line 253 on the T1ADJ, but it seems a bit odd. I think my default would be to NOT specify any line but simply insert a description of "Election 164(6) per copy of attached T3 Return letter" and obviously include a copy of the letter you used with the T3 Trust Return. This is a common process used potentially in upwards of 50% of estate returns (cap loss vs cap gain) and CRA should recognize the obvious.
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Re: Estate Information Return

Post by OnlyMyOpinion »

I did as AltaRed described, cover letter request and supporting docs with both the T1 and the T3 GRE at the time I mailed both.
The returns were mailed 24-Mar, the T1 NOA was issued 18-Apr and the Trust NOA was issued 12-Jun.
Your question is timely though, I'm planning to call the CRA tomorrow to try to confirm that the 164(6) request is at least 'in the queue'.
I'll post an update here.
Last edited by OnlyMyOpinion on 21 Jul 2019 14:24, edited 1 time in total.
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Re: Estate Information Return

Post by AltaRed »

That is a huge improvement in turnaround time. IIRC, the whole process from start to finish was about 18 months, including the 164(6) election refund.
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