Senior, limited income but large cap gain, AMT anomalies in TC calculation

T1
1

As a follow-up to a prior query, I’ve now managed to gather the required info on this file. Total QFFP Cap gain of around $150K, other income ~$25K plus some GIS. Senior, DTC certified and in a home, and fully mentally capable.

Some small prior cap gains ($35K), a small amount of non-cap loss ($12K), likely from the last years of farming.

With Optimizations on (“maximize refund”), TC applies some non-cap loss (~$1K) and just under $74K against the $75 QFFP gain. There’s a small amount of Fed tax and prov tax, and a Social Benefits repayment. All tax is AMT. (All the other optimizations offer similar, but slightly different results.)

With NO optimizations, tax is some $200 less, NO non-cap loss applied and full QFFP amount. (I’m struggling to remember that ordering provision!!) I can’t figure out why that might be true though…and whether the No Opt complies with the ITA.

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I have found that sometimes TaxCycle will do things like that; generally there is a reason, sometimes I can’t find the reason. It’s interesting to see how TaxCycle compares to the other “Pro” software in these instances. I’m still running both in tandem; the other software as a double check (and helps with my OCD).

Perhaps 1,000 of the non capital losses are set to expire this year so TaxCycle chooses to use those instead of the CGE.

In any event, there is no ordering provision here. You are free to use up the non capital losses, or the CGE, or a combination of both. Since this is likely the only chance at using the CGE it may be best to do that. As you said; there is a little less tax to pay too (likely AMT related).

I suppose it’s also unlikely the senior will get to use up their AMT credits in a future year.

3

Thanks @snoplowguy … no wonder I was trying (vainly) to find ordering … there isn’t any! Couldn’t recall and it’s been rather a while since needing to know.

Curious about how TC is coming up with the choices. When I’m back home (at the moment camping in our trailer and without a printer) I’ll run up the different variations and see if I can figure it out…more because I WANT to know than have a need to know.

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I have also found that sometimes I get a different/better result using “minimize tax” optimization…

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Thanks. I have confirmed that even though the client has the DTC, I can elect not to use it if beneficial.