# Stock Option Benefit Deferral, shares cancelled - now what?



## ioweiowe (Dec 31, 2009)

I'm deferring a large stock option benefit. This past year the company went bankrupt, and the corp is being wound up. I've received noticed that the shares have been canceled.

I'm confused as to whether I can continue deferring the stock option benefit. I still have the shares in my brokerage account (worth 0.00). I know that if I wanted to claim a capital loss, I would need to write to CRA and tell them explicitly that I am deeming the shares disposed. What about the case that I don't want to the dispose of the shares! 

I've talked to CRA a bunch of times, and seem to get an even split between yes and no 

I think the same thing is going to happen with Nortel stock eventually.


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## John_Michaels (Dec 14, 2009)

...this is the case with Nortel now, not eventually. No personal experience as I've never cashed my options.

In the Nortel case, as well as JDS years back, people cashed their options for stock. I think this created the same taxable benefit that you speak of. That is, your received $100K 'free'. You owe the capital gain (I don't think it's income) on that amount...say $25K..when you sell your stock.

NOW, the stock is $0 but you still owe CRA that capital gain on the $100K. They only consider the benefit then, now doesn't matter. 

This is unless you can convince the CRA to change their mind like the Ottawa MP did for JDS Uniphase years back.

Fairly accurate assessment?


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## ioweiowe (Dec 31, 2009)

Have nortel shares been canceled? I thought they were delisted, but not canceled.

Stock option benefit is considered income, and as such the massive capital loss that will be incurred when disposing for $0 can not be used to write off the stock option benefit (except in the year you die). So it would be best if I just deferred until I die. But the company went bust and shares canceled - does that mean that the shares are deemed disposed?


Thanks


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## ioweiowe (Dec 31, 2009)

Budget 2010 has relief for poor saps like me stuck deferring stock option benefit taxes!


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