Capital Losses for Investors

KNOWLEDGE EXPECTED OF: QAFP® Professionals

Highest Knowledge Level: Application

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define values associated with capital losses, such as:
    • Capital loss1
    • Allowable capital loss2
    • Non-capital loss
    • Net capital loss3
    • Terminal loss4
  • Define a recapture of capital cost (for depreciable property).5
  • Estimate the capital loss and allowable capital loss resulting from the disposition of capital property.
    • Non-depreciable capital property
      • Personal-use property6
        • Listed personal property7
        • Other property8
  • Identify how a capital loss for depreciable capital property is handled. 
  • Explain the carryforward and carryback provisions for net capital losses.9,10
    • For listed personal property
    • For other capital property 
  • Define an affiliated person.11 
  • Define a superficial loss.12
  • Identify when a loss may not be considered a superficial loss.13
  • Explain the income tax treatment of a superficial loss.14
    • For the transferor
    • For the transferee 
  • Explain how the adjusted cost base of property is affected by a superficial loss.   
  • Define a cumulative net investment loss (CNIL). 
  • Identify the significance of a cumulative net investment loss.

REFERENCES

KNOWLEDGE EXPECTED OF: CFP® Professionals

Highest Knowledge Level: Application

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define values associated with capital losses, such as:
    • Capital loss1
    • Allowable capital loss2
    • Non-capital loss
    • Net capital loss3
    • Terminal loss4
  • Define a recapture of capital cost (for depreciable property).5
  • Estimate the capital loss and allowable capital loss resulting from the disposition of capital property.
    • Non-depreciable capital property
      • Personal-use property6
        • Listed personal property7
        • Other property8
  • Identify how a capital loss for depreciable capital property is handled. 
  • Explain the carryforward and carryback provisions for net capital losses.9,10
    • For listed personal property
    • For other capital property 
  • Define an affiliated person.11 
  • Define a superficial loss.12
  • Identify when a loss may not be considered a superficial loss.13
  • Explain the income tax treatment of a superficial loss.14
    • For the transferor
    • For the transferee 
  • Explain how the adjusted cost base of property is affected by a superficial loss.   
  • Define a cumulative net investment loss (CNIL). 
Additional Knowledge Expected of CFP Professionals
  • Define a business investment loss.15
  • Define an allowable business investment loss (ABIL).16
  • Explain the carryforward and carryback options available for an allowable business investment loss.17
  • Explain the significance of a cumulative net investment loss.
  • Estimate a superficial loss.

REFERENCES

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