If a taxpayer has both net capital and non-capital loss carry overs and does not have sufficient income in the current and previous years to deduct all of these amounts, which type of loss should be deducted first?

Question

Quizplus · Accepted Answer

The Answer is There is no clear cut answer to this question. Net capital losses have an unlimited life but can only be carried over to the extent of net taxable capital gains in the carry over year.
This would suggest that, if net taxable capital gains are present in the current year, the use of net capital losses should receive priority. This would be particularly true if additional net taxable capital gains are not expected in future years. In contrast, non-capital losses can be deducted against any type of income. However, the downside here is that their carry forward period is limited to 20 years. While no firm conclusion is available, in most cases the lengthy carry forward period for non-capital losses, would suggest using net capital losses first. However, this tentative conclusion would be altered if the taxpayer commonly has net taxable capital gains.

If a Taxpayer Has Both Net Capital and Non-Capital Loss