Turbotax Net file Error: Capital Gifts Amount

 

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Q: How to correct a TurboTax Net file error related to capital Gifts? A: Check amounts for proceeds & gifts, Check other entries



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Relevant Material: "In Canada, gifting a capital property (such as real estate or stocks) to someone other than your spouse is considered a "deemed disposition" at its fair market value (FMV) at the time of the gift. The significance of this is that you, the giver, must report any resulting capital gain on your tax return for that year, potentially incurring a tax liability. 

Amount of Capital Gain
The capital gain is calculated as follows: 
  • Proceeds of Disposition: The fair market value (FMV) of the property at the time of the gift.
  • Adjusted Cost Base (ACB): The original purchase price plus any expenses for buying and improving the property.
  • Outlays/Expenses: Any costs incurred when making the gift. 
Capital Gain = Proceeds of Disposition (FMV) - Adjusted Cost Base (ACB) - Outlays/Expenses 
Only 50% of the total capital gain is taxable and must be included in your income for the year. 
Significance and Implications
The donor may have a tax liability because the gift is treated as a sale at fair market value. The recipient's cost base is also set at this FMV. There are exceptions for gifts between spouses or common-law partners and for certain donations to charities. The principal residence exemption might apply if the gifted property was your principal residence Virtus Group. 
Reporting with TurboTax Canada
To report this in TurboTax Canada, you would go to the Income & Expenses section and report the gift as a disposition at FMV. For charitable donations, use Form T1170 and Schedule 3. Getting a professional appraisal to confirm FMV is recommended. .." (Google) 
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