Q: I have 3 questions in relation to my plans for realizing a capital loss re: a Starbucks (SBUX) holding within a corporate account. So far in 2024, I have realized net capital gains of ~$260,000 (100%) within this corporate account (I did this so as to capture the 50% inclusion rate effective before June 25, 2024). However, I now wish to partially offset this realized gain by realizing a capital loss for this position in Starbucks, currently at ~$90,000 (100%) unrealized capital loss.
(A) Would the 66.67% inclusion rate apply for this SBUX loss, if realized, even if all the previously realized capital gains during 2024 are applied at the 50% inclusion rate? (I realize you are not accountants, but I do know that you are generally aware of basic accounting principles related to commonly encountered investment scenarios.) It is my understanding that the 66.67% inclusion rate would apply, for this loss after June 25, but I am hoping you can corroborate this.
(B) My plan is to reacquire the Starbucks shares, after 30 days; however, I am not sure whether to just hold the SBUX sale proceeds in cash, for the minimum >30 day period, or whether to switch temporarily into a similar type of investment—what would you consider to be a reasonable “proxy” for SBUX? (note—I already own a similarly-sized position in QSR as my current SBUX position). Or given the possible slowing of consumer spending, and frequent summer stock trading doldrums, would you rather just hold cash for the >30-day waiting period?
(C) Finally, I am always nervous when the >30-day waiting period overlaps with a company earnings announcement (potential for greater price volatility). It appears that the next likely earnings announcement date for SBUX is expected to be around August 6, 2024. In other words, I could either realize the SBUX loss in the next few days (e.g., settlement on July 3 or July 5), or else wait until after the early August earnings announcement. I am curious how you would think about and approach this issue?
Ted
(A) Would the 66.67% inclusion rate apply for this SBUX loss, if realized, even if all the previously realized capital gains during 2024 are applied at the 50% inclusion rate? (I realize you are not accountants, but I do know that you are generally aware of basic accounting principles related to commonly encountered investment scenarios.) It is my understanding that the 66.67% inclusion rate would apply, for this loss after June 25, but I am hoping you can corroborate this.
(B) My plan is to reacquire the Starbucks shares, after 30 days; however, I am not sure whether to just hold the SBUX sale proceeds in cash, for the minimum >30 day period, or whether to switch temporarily into a similar type of investment—what would you consider to be a reasonable “proxy” for SBUX? (note—I already own a similarly-sized position in QSR as my current SBUX position). Or given the possible slowing of consumer spending, and frequent summer stock trading doldrums, would you rather just hold cash for the >30-day waiting period?
(C) Finally, I am always nervous when the >30-day waiting period overlaps with a company earnings announcement (potential for greater price volatility). It appears that the next likely earnings announcement date for SBUX is expected to be around August 6, 2024. In other words, I could either realize the SBUX loss in the next few days (e.g., settlement on July 3 or July 5), or else wait until after the early August earnings announcement. I am curious how you would think about and approach this issue?
Ted
