# Losses in RSPs



## JustAGuy (Feb 5, 2012)

So, let's say that someone were to make a gamble on a company who's stock had plummeted to a value that looks like it's either got two options: Bankruptcy or recovery. And let's also say that that someone were to buy in, and then the next day the stock is delisted and files bankruptcy. And let's also say that this money was invested from an rsp.

What now? When the money is marked as a loss to the portfolio. Do we get to claim the losses on our taxes? Or is that only for non-rsp/non-tfsa trading?


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## HaroldCrump (Jun 10, 2009)

In tax terminology, this is known as *SOL*


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## andrewf (Mar 1, 2010)

You can't really complain that you don't get additional tax benefits for losses in a tax sheltered account.


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## JustAGuy (Feb 5, 2012)

I'm not complaining, I'm simply trying to understand the process as I haven't had to deal with this scenario before.

I'm also unsure of what happens now... apparently the stock I had bought (DDMG) is now being traded as DDMGQ... but my Questrade account does not yet reflect this... do I have to call them to get them to switch it over and be able to trade this? Or is this an entirely separate entity and my shares of DDMG evaporate? Or ???


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## Eclectic12 (Oct 20, 2010)

JustAGuy said:


> ... What now? When the money is marked as a loss to the portfolio. Do we get to claim the losses on our taxes? Or is that only for non-rsp/non-tfsa trading?


There's nothing one can do. Capital losses claimed on taxes are only allowed for taxable accounts. (It's a fair trade-off - gains in the RRSP also won't be reported on one's taxes until withdrawn from the RRSP.)


Since the stock is delisted - I don't believe an RRSP swap can happen. 


If the stock started at $20, one has given up at $12, one can either:

a) sell the stock and invest in something else (all in the RRSP).

b) swap the stock in the RRSP for cash, where the ACB will be whatever the stock traded for when swapped (stock is now in a taxable account, with an ACB of say $11.75, the RRSP has cash at $11.75 and a swap fee of say $40 is charged to the taxable account). If the stock keeps going down and is sold for $6.75 - there will be a loss of $5. If the stock goes to $15.75, there is a capital gain of $4.


IMO, it's pretty much take the loss or sell for a loss. There won't be many situations where an RRSP swap will be worth the time, effort and swap fee but an RRSP swap is a possibility (assuming the broker has banned only the illegal swaps instead of all swaps).


Cheers


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## steve41 (Apr 18, 2009)

On the bright side, the feds lost as well.


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## Argonaut (Dec 7, 2010)

This may be a pointless and pointed question, but why did you do this Mega Man? Why oh why oh why. 

This stock had more red flags than Soviet Russia.


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## JustAGuy (Feb 5, 2012)

I felt like gambling.

I figured at the stage it was at, it was either going to double in value, or go bankrupt.

And bankruptcy it was.


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## humble_pie (Jun 7, 2009)

it's true, why do you keep doing this, justaG ?

you're not putting us on, are you ? i mean, you are one disaster after another.

sounds like your stock with the new 5-character symbol has gone to the pinkest of the pink sheets. You won't be able to enter an online order. Who knows if questrade will even be willing to take a phone order. Pink sheets are difficult environment. In some cases the commish for a phoned pink sheet order can be greater than the stock is worth.

i don't suppose there's any use suggesting that a bod like yourself read some of those titles in Eight with Weight & get a grip on his financial life.


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## JustAGuy (Feb 5, 2012)

yeah, I've been on hold with Questrade since making this thread.

I've actually been making some ok trades the past month. Got cocky I guess.



humble_pie said:


> it's true, why do you keep doing this, justaG ?
> 
> you're not putting us on, are you ? i mean, you are one disaster after another.
> 
> ...


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## OptsyEagle (Nov 29, 2009)

There are huge benefits in what you have itemized. Not only did you get to deduct the amount you paid for the stock, when you contributed it into your RRSP, but now you don't have to pay taxes on the withdrawal of all the money you would have had to, if the stock had gone up.

A very nice happy ending.


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## humble_pie (Jun 7, 2009)

no it's not a happy ending.

it's take your money & funnel it down into a bankrupt black hole in return for a paltry tax deduction. Somewhere in cmf forum the OP posted his earned income figs, the tax deduction would not have been particularly significant.

keep this up & sooner or later the funneller loses everything. Doesn't matter if he saves a couple $ via small deductions on pay. The point is he has no savings. The capital is gone.

keep it up on a broad public scale & the nation hurts too. No income to collect taxes on, rrsp wasted, bankrupt old age, future homeless to support ...


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## OptsyEagle (Nov 29, 2009)

Sorry, I should have pointed out that I was kidding.


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## JustAGuy (Feb 5, 2012)

Where did you get the impression that I have no savings? I'm putting roughly $2000 away each month separate from what I've "invested", and my wife has almost equal savings to me... Between the two of us we have around $80k in savings separate from investments..

Yes, this was a bad investment. Yes I've made other bad investments. But, having not even mentioned the amount that I gambled on this one I think you're jumping the gun a little by thinking I'm going to be bankrupt and homeless in my old age.


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## humble_pie (Jun 7, 2009)

just kidding also.

but seriously you are missing not just the main course but the entire meal. You are jumping from cocktails to after-dinner mints & coffee. 

when you arrived here you said, simultaneously, that you knew nothing about investing but you wanted to "play at day-trading." It was like a 4-year-old waving around a box of matches & striking them by 2s & 3s & throwing the lit burners all over the dry furniture.

since you have serious savings & a wife, all the more reason to settle down & start learning how to manage your financial life.


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## JustAGuy (Feb 5, 2012)

For the record, when this happens, it takes 24 hours and then the shares are converted in Questrade to the new pink sheets and one is able to sell whatever remains.


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## Eclectic12 (Oct 20, 2010)

JustAGuy said:


> For the record, when this happens, it takes 24 hours and then the shares are converted in Questrade to the new pink sheets and one is able to sell whatever remains.


Hmmmm ... so has it gone bankrupt? It sounds like it has shrunk to a smaller, troubled company.


I've had a couple companies go bankrupt, including having the assets sold by the trustee in a taxable account. End result was that I couldn't sell to get anything out of it. Fortunately, in a taxable account I could still declare the capital loss and make use of it.


Hopefully the amount was small and you've learned your lesson. To be clear, the issue is the loss has destroyed the RRSP contribution room with absolutely no benefit.

That's why I prefer to focus on more conservative choices in a registered account.


Cheers


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## andrewf (Mar 1, 2010)

But you already received a tax benefit. If you think about it, depending on your tax rate, something like 20 - 50% of the loss was taxes you didn't pay. You are gambling with the government's money. If you win, they get a cut down the road, if you lose, they lose too.


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## JustAGuy (Feb 5, 2012)

Yeah, they filed chapter 11. They go to public auction next Friday.

It was $3600 that I bought, and I got $350 of it back... big enough to be disappointed in myself.


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