How do I claim the loss for an investment in a limited partnership that has gone bankrupt?

I have a new client who invested in a limited partnership in 2006.  For the last few years of returns that I have copies of, the T5013's have all been losses.  Now the company has gone bankrupt, and she would like to be able to claim her initial investment as a loss.  It is a limited partnership, not a Canadian private corporation.  Does it still count as an ABIL?  Or is there a form to enter her initial investment as the loss amount?

Answer

The last comment was correct - you claim it as a capital loss on the schedule 3.  However, you have to make sure that you use the adjusted cost base of the partnership interest, not the initial investment amount.  In more recent years, limited partnerships had to put an "at-risk" amount on the T5013.  If that box is completed, it is usually pretty much the same as the adjusted cost base so you could use that figure.  However, you also have to record the loss in the year that it was incurred - in other words, find out when the bankruptcy was, what the at-risk amount was at that time, and that is your capital loss.

Each time the form allocated a loss to your client, it will have reduced the adjusted cost basis.

You will have to do a T1ADJ to record the loss in the year of the bankruptcy.

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