f an individual at death held various personal-use properties (“PUP”), each with a cost and an FMV of under $1,000, and there was not personal use of those items following death (e.g., they were put in storage), could the estate claim capital losses when they were sold?
CRA noted that pursuant to s. 46(1) each such property would be deemed to be disposed of by the deceased for proceeds of disposition of $1,000 and to have a deemed ACB of $1,000 (and also noted that any capital loss of the deceased from the disposition of PUP would be deemed to be nil by s. 40(2)(g)(iii).)
However, as the estate was a distinct taxpayer from the deceased, a factual determination would need to be made as to whether it was PUP to the estate. The estate’s ACB pursuant to s. 70(5)(b) would be the FMV of the property immediately before death and, if the property was not PUP to the estate, its subsequent sale could give rise to a capital loss.