WO2012058746A1

WO2012058746A1 - Tax loss verification method

Info

Publication number: WO2012058746A1
Application number: PCT/CA2010/001802
Authority: WO
Inventors: Paul Cairns
Original assignee: Panacea Financial Ltd.
Priority date: 2010-11-05
Filing date: 2010-11-12
Publication date: 2012-05-10
Also published as: CA2720364A1

Abstract

A method involving at least in partial utilization a programmed computer for verifying tax losses with proper documentation to substantiate the loss acceptable to tax authorities. In one embodiment, crystallization for a financial loss from orphaned capital is achieved by determining with the programmed computer the existence of orphaned capital within an investment portfolio and the type of the orphaned capital. The owner information is determined and subsequently a purchase and sale agreement between the owner and a clearing entity is effected at a predetermined selling price. The orphaned capital is then sold and documentation evidencing sale and transfer of the orphaned capital is issued to the owner for crystallization of said financial loss In other embodiments, a database of orphaned capital may be provided with the orphaned capital information being collected with a suitable program for mining such information. This information can then be conveyed to the clearing entity.

Description

TAX LOSS VERIFICATION METHOD

FIELD OF THE INVENTION

[0001] This invention relates to effectively clearing orphaned capital and more particularly, the present invention relates to methodology for generating the necessary documentation for a substantiated tax loss acceptable to the tax authorities.

[0002] BACKGROUND OF THE INVENTION

[0003] In the present investment community, there have been significant losses in a variety of investment instruments. A number of methods have been proposed to effect stop-loss orders or pool investors' losses in one form or another to reduce overall net effect in the investment instrument.

[0004] Generally speaking, once a loss is experienced by an investor, the individual loses interest in the instrument and as a result, these simply remain with the brokerage house, trust funds, etc. as orphaned capital. Disgruntled investors then, with a view to effecting a tax loss, simply claim with the tax authorities that the investment became worthless and this loss is applied against any capital gains the individual may have. Although this is broadly correct, there is one significant complication to cause the already disgruntled investor even greater problems. This is owing to the fact that the tax authorities do not accept simply the "word" of investors suffering the loss; there must be some record of quantifying the loss of the investment which, in the absence of such documentation, could be said to be any amount by the investor and hence the need for quantification by the tax authorities. [0005] A further problem is the difficulty entwined within this situation gives rise to the fact that the orphaned capital in some situations can attract handling fees via the trust company, broker, investment advisor, etc. These investment professionals often have to return to their clients who may have suffered significant losses and ask for the fees to be paid. This is a difficult situation and in some instances, the investment professional ends up being the party paying the fees within the orphaned capital vehicle.

[0006] It would be desirable if there were a methodology to acquire and aggregate orphaned capital within an investment vehicle and one which also would provide a protocol for generating a quantified and substantiated document acceptable to the tax authorities which could legitimately be used as a tax loss.

[0007] The present invention is directed to satisfying this need.

SUMMARY OF THE INVENTION [0008] It is an object of the present invention to obviate or mitigate at least one disadvantage of the prior art.

[0009] Conveniently, the existing methodology can be applied to any form of orphaned capital such as a personal loan, shareholder loan, investment loan, as well as a registered security such as an RRSP, RRIF, LIRA and LRSP, to list a few non-limiting examples.

[0010] In accordance with an embodiment of the present invention there is provided a method for crystallizing a financial loss from orphaned capital utilizing at least partially a programmed computer, comprising providing an investment portfolio from at least one owner; determining with said programmed computer the existence of orphaned capital within said investment portfolio; determining with said programmed computer the type of said orphaned capital; obtaining with said programmed computer owner information; generating with said programmed computer a purchase and sale agreement between said owner and a clearing entity at a predetermined selling price; effecting said sale of said orphaned capital; generating with said programmed computer documentation evidencing sale and transfer of said orphaned capital; and issuing said owner said documentation for crystallization of said financial loss. [0011] In accordance with a further embodiment of the present invention, there is provided a method for crystallizing a financial loss from orphaned capital utilizing at least partially a programmed computer, comprising providing a source of orphaned capital information from a source thereof; obtaining with said programmed computer orphaned capital information; forwarding with said programmed computer said orphaned capital information to a purchaser of said orphaned capital or a database for retaining said information; generating with said programmed computer a purchase and sale agreement between said owner and a clearing entity at a predetermined selling price; effecting said sale of said orphaned capital; generating with said programmed computer documentation evidencing sale and transfer of said orphaned capital; and issuing said owner said documentation for crystallization of said financial loss.

[0012] Other aspects and features of the present invention will become apparent to those ordinarily skilled in the art upon review of the following description of specific embodiments of the invention in conjunction with the accompanying figures.

BRIEF DESCRIPTION OF THE DRAWING

[0013] Embodiments of the present invention will now be described, by way of example only, with reference to the attached Figure, wherein:

Figure 1 is a schematic flowchart of the stages involved in the method;

Figure 2 is a flowchart of an alternate embodiment; and

Figure 3 is a flowchart of a further embodiment.

Similar numerals used in the Figures denote similar elements. DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

[00 4] Reference may be made below to specific elements, numbered in accordance with the attached figures. The discussion below should be taken to be exemplary in nature, and not as limiting of the scope of the present invention. The scope of the present invention is defined in the claims, and should not be considered as limited by the implementation details described below, which as one skilled in the art will appreciate, can be modified by replacing elements with equivalent functional elements. [0015] Referring to Figure 1 , shown is one embodiment of the present invention in a schematic flowchart form; the overall process is denoted by reference numeral 10. The investment portfolio 2 is provided and there may be any number of investment portfolios for which the method discussed hereinafter can be effected. Making use of a programmed computer (not shown and not shown for the remaining detailed description), the type of orphaned capital can be determined as noted by step number 14. The orphaned capital can be determined for a single investment portfolio or a host of independent portfolios from a single individual or conducted for a variety of individuals. As examples of the orphaned capital, without being limiting, the same may be personal loans, shareholder loans, investment loans, active cease trade order, or secured registered accounts such as an RRSP, RRIF, LIRA, LRSP, inter alia. Once the orphaned capital is determined as to the type at 16, then the same is isolated as the personal loan 18, shareholder loan 20, investment loan 22, registered security 24, or any other type of orphaned capital, broadly denoted by reference numeral 26 in Figure 1.

[0016] Once the type of orphaned capital is determined, the purchaser 28 and owner 30 of the investment portfolio 12 decide on a predetermined price that the purchaser may acquire orphaned capital for in order to provide disposition for the owner 30. Once the predetermined amount is decided upon, a purchase and sale agreement is generated, this step being denoted by reference numeral 32, where title to the orphaned capital is conveyed to the purchaser 28, this step being denoted by reference numeral 34. Once disposition has been effected, a sale documentation evincing the disposition to the purchaser from the owner is effected. This step is denoted by reference numeral 36. Once the documentation is generated, the certificate or other instrument is issued to the owner. This step is denoted by reference numeral 38. At this point, the certificate provides a quantification of the amount of capital that was disposed and the dollar value at the time of disposition in order to provide all of the necessary information requisite to effect the tax laws, while staying within the boundaries of the requirements of the tax authorities.

[0017] As will be appreciated, where the instrument is an orphaned capital is a registered security, deregistration of the property will have to be effected by the purchaser and then reregistered with the new purchaser in order to observe the requisite protocol required by the tax authorities. [0018] Referring now to Figure 2, shown is an alternate embodiment of the method. In the example, numeral 40 represents a source of orphaned capital information from individual investors, financial institutions, investment professionals, etc. This may be from the financial records of these entities. Access to the information is made available by a suitable program 42 of, for example, the trolling type, although others will be appreciated by those skilled in the art. The acquired information from program 42 is collected in a database or repository 44. As an alternative, the information may be directly forwarded to the database 44 by suitable means such as the internet 46 via a suitable computer (not shown). As a further alternative, the information may be directly transferred in a similar manner to that noted above directly to the purchaser. At the source 40, the investor, etc. may be hyperlinked to the purchaser 28. The purchaser 28 has access to the database as indicated by numeral 48. The issuance of the certificate to the owner follows the protocol noted with respect to Figure 1. [0019] Turning to Figure 3, shown is a further variation in the method. In this embodiment, investment activity 50 is, by use of a suitable computer (not shown) characterized with a loss or gain determination at 52. Loss information 54 is forwarded to the individual investor, etc. 56. A determination of orphaned capital is made at 58 with subsequent notification at 60 to the database 44. Notification may also be forwarded to the financial institution 62, the individual investor 64, investment professional 66 and purchaser 28. The database 44 may also be in communication with the purchaser 28 as discussed previously. Another exchange of information is effected between the institution 62, investor 64 and professional 66 to the purchaser 28. This may be by hyperlink or other suitable means. Similarly, entities 66, 64 and 62 communicate with database 44.

[0020] As a further alternative, loss information 54, via the program 42 or other means may be communicated directly to the purchaser 28. The conclusion of the translation is effected using the steps noted with respect to Figures 1 and 2. [0021] The above-described embodiments of the present invention are intended to be examples only. Alterations, modifications and variations may be effected to the particular embodiments by those of skill in the art without departing from the scope of the invention, which is defined solely by the claims appended hereto.

Claims

CLAIMS The embodiments of the invention in which an exclusive property or privilege is claimed are defined as follows:

1. A method for crystallizing a financial loss from orphaned capital utilizing at least partially a programmed computer, comprising:

providing an investment portfolio from at least one owner;

determining with said programmed computer the existence of orphaned capital within said investment portfolio;

determining with said programmed computer the type of said orphaned capital;

obtaining with said programmed computer owner information;

generating with said programmed computer a purchase and sale agreement between said owner and a clearing entity at a predetermined selling price;

effecting said sale of said orphaned capital;

generating with said programmed computer documentation evidencing sale and transfer of said orphaned capital; and

issuing said owner said documentation for crystallization of said financial loss.

2. The method as set forth in claim 1 , wherein determining with said programmed computer the existence of orphaned capital within said investment portfolio includes determining for a plurality of owners.

3. The method as set forth in claim 1 , wherein said owner is an investment firm.

4. The method as set forth in claim 1 , wherein said owner is a trust company.

5. The method as set forth in claim 1 , wherein said owner is an investment firm.

6. The method as set forth in claim 1 , wherein said owner is a stock brokerage.

7. The method as set forth in claim 1 , wherein said orphaned capital is a personal loan.

8. The method as set forth in claim 1 , wherein said orphaned capital is a shareholder loan.

9. The method as set forth in claim 1 , wherein said orphaned capital is an investment loan.

10. The method as set forth in claim 1 , wherein said orphaned capital is a security in a registered account.

11. The method as set forth in claim 10, wherein said a security is an RRSP.

12. The method as set forth in claim 10, wherein said a security is an RRIF.

3. The method as set forth in claim 10, wherein said a security is an LIRA.

14. The method as set forth in claim 10, wherein said a security is an LRSP.

5. The method as set forth in claim 10, wherein said a security is an LRSP.

16. The method as set forth in claim 10, further including the step of deregistering registered securities by said clearing entity.

17. The method as set forth in claim 16, further including the step of reregistering said deregistered securities by said clearing entity.

18. The method as set forth in claim 1 , wherein said orphaned capital is an investment with an active cease trade order.

19. The method as set forth in claim 1 , further including the step of approving for qualification said orphaned capital prior to generating said purchase and sale agreement.

20. A method for crystallizing a financial loss from orphaned capital utilizing at least partially a programmed computer, comprising:

providing a source of orphaned capital information from a source thereof;

obtaining with said programmed computer orphaned capital information;

forwarding with said programmed computer said orphaned capital information to a purchaser of said orphaned capital or a database for retaining said information;

effecting said sale of said orphaned capital;

21 . The method as set forth in claim 20, wherein obtaining said orphaned capital information includes employing a trolling program for capturing said information.

22. The method as set forth in claim 20, wherein orphaned capital information is forwarded to said database directly from said source through the internet.

23. The method as set forth in claim 20, wherein said orphaned capital information is hyperlinked to at least one of said database and said purchaser.

24. The method as set forth in claim 20, wherein orphaned capital information is forwarded to said database directly to said purchaser through the internet.