IFITC Chapter_8

IFITC Chapter_8 - Chapter 8 Capital Gains: Business Related...

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Chapter 8 Capital Gains: Business Related 1
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Capital Gains: Business Avoidance – GAAR Capital Receipt vs. Income Receipt Primary Intention Secondary Intention Badges of trade or behavioural factors 2
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Reserves Taxpayer may not receive full proceeds in year of disposition. Deferral of portion of gain realized available through claiming a reserve Reserve is lesser of: a) x Gain = Reasonable reserve b) (1/5 of Gain) x (4 – # of Preceding taxation years ending after disposition) Proceeds not yet due Total proceeds 3
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ACB and Capital Cost Adjusted Cost Base (ACB) defined as cost plus or minus legislated adjustments Adjustments include: Cost base of land increased by interest and property taxes denied Denied reasonable costs of surveying or valuing property added to cost of property Cost of property reduce by government assistance Exception: ACB of depreciable property is only its capital cost (no adjustments) 4
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Non-arm’s length transfer of depreciable property Undepreciated Capital Cost (UCC) to acquirer will equal: UCC of transferor if no election is made on the interspousal transfer Cost of the property to transferor immediately prior to transfer + taxable capital gain on transfer if election is made on interspousal transfer 5
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Foreign Exchange Gains and Losses If foreign exchange gain/loss from an income
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IFITC Chapter_8 - Chapter 8 Capital Gains: Business Related...

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