Profile is not catching the capital loss on a rental property, but has captured the capital gains on two other properties that were sold in 2011


1 person found this helpful


Here is the answer to your specific situation:

When you dispose of a depreciable property, you reduce your CCA pool by the lesser of cost or proceeds.  If proceeds is greater than ACB, then the excess is a capital gain.

In the sample file, there were three building dispositions.  If you go to T776 AssetList#1, there is a column showing the “Lesser of cost and proceeds”.  If you add up all three dispositions, the lesser of cost or proceeds is $859,808.50.  If you go to T776CCA (CCA Item #1), you will see that the pool was reduced by that amount.  As proceeds were equal to UCC, there is no recapture or potential terminal loss.  The two buildings where proceeds is greater than ACB are properly showing up on S3.  You can never create a capital loss from a depreciable property disposition.

Here is how the proceeds were recorded:

Reduction in UCC: $859,808.50
Capital gain: $83,203.57
Total: $943,012.07 (859,808.50 + 83,203.57)

This is equal to the total proceeds received of $943,012.07 on the three building dispositions ($2669,155.54 + 292,856.53 + $381,000), so everything is in balance.  Profile is handling the situation appropriately.

Hope the above has answered your question.

Was this answer helpful? Yes No
1 additional answer

No answers have been posted

More Actions

People come to ProFile for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.

Select a file to attach: