Calculating capital loss in a T1 deceased return in ProTax

If a deceased taxpayer has had capital losses in the year of death, this amount will show as a negative number on line 12700 of the T1 jacket.

You are allowed to use capital losses to reduce income in the year of death. However, the current year losses must be reduced by whatever capital gains deductions the client has had in the past. If it does not match CRA records then it will generate an EFILE error.

From the remaining net capital loss, subtract any capital gains deductions the deceased has claimed to date. Use any loss left to reduce other income for the year of death, the year before the year of death, or for both years.

Contact the CRA EFILE helpdesk to determine what the taxpayer has claimed in the past.

For more information on capital losses in the year of death see CRA's reference here.