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DATE (! ,,IT4 ,A *ANGE 9 A DE"P;TAL 9T]PRET,N MAY AL 2 ANN\NC$ 9 ! ,9COME ,TAX ,TE*NICAL ,NEWS4 ,IF Y H ANY -;TS REG>D+ MATT]S 4CUSS$ 9 ? ,,IT1 PL1SE S5D !M TO3 ,DIRECTOR1 ,BUSI;S & ,PUBLIC,NS ,DIVI.N ,9COME ,TAX ,RUL+S ,DIRECTORATE ,POLICY & ,LEGISL,N ,BRAN* ,REV5UE ,CANADA ,OTTAWA ,,ON ,K#A;,A #J;,L#E ,9T]PRET,N BULLET9S C 2 F.D ON ! ,REV5UE ,CANADA ,9T]NET SITE AT3 _+WWW.RC.GC.CA_: #C ,3T5TS C#A ,APPLIC,N ,SUMM>Y ,4CUS.N & ,9T]PRET,N ,G5]AL 7P>AGRAPH #A7 ,F>M ,PROP]TY ,TRANSF]R$ 7P>AGRAPHS #B-AJ7 ,SITU,NS 9 : ,SUBSEC;N #GC7#C7 ,APPLIES 7P>AGRAPH #AA7 ,SITU,NS 9 : ,SUBSEC;N #GC7#C7 ,DOES ,N ,APPLY 7P>AGRAPH #AB7 ,TRU/S = ,M9ORS 7P>AGRAPH #AC7 ,FAMILY ,F>M ,CORPOR,NS & ,"PN]%IPS 7P>AGRAPHS #AD-AI7 ,TRANSF]S 6,P>5T 7P>AGRAPH #BJ7 ,US$ ,PR9CIP,Y 9 ! ,BUSI;S ( ,F>M+ 0A ,P>5T1 OR 0HIS OR H] ,SP\SE OR ,* 7P>AGRAPHS #BA-BF7 ,ACTIVELY ,5GAG$ ON A ,REGUL> & ,3T9U\S ,BASIS 7P>AGRAPH #BG7 ,RES]VES 7P>AGRAPH #BH7 ,ATTRIBU;N 7P>AGRAPHS #BI-CJ7 ,,ITAR ,PROVI.NS--,L& 7P>AGRAPH #CA7 #D ,,IT-#BFH;,R#D D#A ,,ITAR ,PROVI.NS--,DEPRECIA# ,PROP]TY (A ,PRESCRIB$ ,CLASS 7P>AGRAPH #CB7 ,,ITAR ,PROVI.NS--,ELIGI# ,CAPITAL ,PROP]TY 7P>AGRAPH #CC7 ,,ITAR ,PROVI.NS--,FAMILY ,F>M ,CORPOR,NS 7P>AGRAPH #CD7 ,PROP]TY ,DEPRECIA# ,PURSUANT 6,"P ,,XVII 7P>AGRAPHS #CE-CG7 ,EXPLAN,N ( ,*ANGES ,APPLIC,N ,? BULLET9 4CUSSES ! LAW Z X APPLIES 6TRANSF]S O3URR+ AF #AIIB4 ,= TRANSF]S 2F #AIIC1 PL1SE REF] TO ,,IT-#BFH;,R#C1 XS ,SPECIAL ,REL1SE & *ANGES 6! LAW AF ,SEPTEMB] #F1 #AIIA & 2F #AIIC4 ,SUMM>Y ,EXCEPT Z EXPRESSLY PROVID$ = 0! ,ACT1 :5 ANY?+ IS 4POS$ ( 0A TAXPAY] 6A P]SON ) :OM ! TAXPAY] DOES N D1L AT >M'S L5G? = NO PROCE$S OR = PROCE$S LESS ?AN #E ,,IT-#BFH;,R#D E#A XS FAIR M>KET VALUE1 "U P>AGRAPH #FI7#A77B7 ! TAXPAY] IS DEEM$ 6H RCVD PROCE$S ( 4POSI;N EQUAL 6XS FAIR M>KET VALUE4 ,? BULLET9 --------------------------------------#B 4CUSSES AN EXCEP;N 6P>AGRAPH #FI7#A77B7 T APPLIES :5 A P>5T1 :ILE LIV+1 TRANSF]S F>M PROP]TY1 %>ES (! CAPITAL /OCK (A FAMILY F>M CORPOR,N OR AN 9T]E/ 9 A FAMILY F>M "PN]%IP 6HIS OR H] *4 8,F>M PROP]TY0 IS PROP]TY US$ 9 ! BUSI;S ( F>M+ & 9CLUDES L& 9 ,CANADA1 DEPRECIA# PROP]TY 9 ,CANADA (A PRESCRIB$ CLASS & ELIGI# CAPITAL PROP]TY (A BUSI;S C>RI$ ON 9 ,CANADA4 ,! EXCEP;N P]MITS ! DEF]RAL ( TAX ON ANY CAPITAL GA9S & RECAPTURE ( CAPITAL CO/ ALL[.E ON ! 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RULES 9 P>AGRAPHS #GC7#C77A7 7= DEPRECIA# PROP]TY (A PRESCRIB$ CLASS71 #GC7#C77B7 7= L&7 OR #GC7#C77B4#A7 7= ELIGI# CAPITAL PROP]TY71 A P>5T'S DEEM$ PROCE$S ( 4POSI;N MAY BE3 #AJ ,,IT-#BFH;,R#D E#B 7A7 9 ! CASE ( DEPRECIA# PROP]TY (A PRESCRIB$ CLASS1 ANY AM.T 2T ! FAIR M>KET VALUE (! PROP]TY & XS UNDEPRECIAT$ CAPITAL CO/ Z DET]M9$ PURSUANT 6CLAUSE #GC7#C77A77II77,B7 7SEE 2L72 7B7 9 ! CASE ( L&1 ANY AM.T 2T ! FAIR M>KET VALUE (! PROP]TY & XS ADJU/$ CO/ BASE2 & 7C7 9 ! CASE ( ELIGI# CAPITAL PROP]TY (A BUSI;S (! P>5T1 ANY AM.T 2T ! FAIR M>KET VALUE (! PROP]TY &! AM.T DET]M9$ 9 ! =MULA 9 CLAUSE #GC7#C77B4#A77II77,B7 7SEE 2L74 ,CLAUSE #GC7#C77A77II77,B7 PROVIDES T ! UNDEPRECIAT$ CAPITAL CO/ (A DEPRECIA# PROP]TY IS ! PROPOR;NATE %>E (! UNDEPRECIAT$ CAPITAL CO/ (! CLASS T ! FAIR M>KET VALUE (! PROP]TY IS (! FAIR M>KET VALUE ( ALL ! PROP]TY 9 T CLASS4 ,! AM.T 9 CLAUSE #GC7#C77B4#A77II77,B7 IS EQUAL 6#D OV] #C "TS ! #AA ,,IT-#BFH;,R#D F#B PROPOR;NATE %>E (! CUMULATIVE ELIGI# CAPITAL (! BUSI;S T ! FAIR M>KET VALUE (! ELIGI# CAPITAL PROP]TY IS (! FAIR M>KET VALUE ( ALL ! ELIGI# CAPITAL PROP]TY (! BUSI;S4 8#D OV] #C0 IS REQUIR$1 9 VIEW (! #C OV] #D 9CLU.N RATE = ELIGI# CAPITAL PROP]TY1 6PLACE ! * 9 ! SAME TAX POSI;N Z ! P>5T 3C]N+ ! PROP]TY4 --------------------------------------#C ,9 APPLY+ ^! RULES1 ! FAIR M>KET VALUE1 ADJU/$ CO/ BASE1 UNDEPRECIAT$ CAPITAL CO/ ( PROP]TY &! CUMULATIVE ELIGI# CAPITAL1 Z ! CASE MAY BE1 >E -PUT$ IMMLY 2F ! "T ( TRANSF]4 #C4 ,! FOLL[+ >E EXAMPLES (! APPLIC,N ( P>AGRAPH #GC7#C77B73 7A7 ,F>M L& ) AN ADJU/$ CO/ BASE ( 4#H1JJJ &A FAIR M>KET VALUE ( 4#AD1EJJ IS TRANSF]R$ 6A F>M]'S *4 ,IF ! AGRE$ SELL+ PRICE IS3 ,CASE #A 4#G1JJJ ,CASE #B 4#H1JJJ ,CASE #C 4#AC1JJJ #AB ,,IT-#BFH;,R#D A#C ,CASE #D 4#AF1JJJ ,CASE #E ,NIL ,! DEEM$ PROCE$S W 2 ,CASE #A 4#H1JJJ ,CASE #B 4#H1JJJ ,CASE #C 4#AC1EJJ ,CASE #D 4#AD1EJJ ,CASE #E 4#H1JJJ 7B7 ,F>M L& ) AN ADJU/$ CO/ BASE ( 4#H1JJJ &A FAIR M>KET VALUE ( 4#F1EJJ IS TRANSF]R$ 6A F>M]'S *4 ,IF ! 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PROCE$S ( 4POSI;N ON S* A TRANSF]4 ,9 A4I;N1 SUBSEC;N #BJ7#A7 (! ,,ITAR HAS NO APPLIC,N 9 DET]M9+ 8PROCE$S ( 4POSI;N O!RWISE DET]M9$0 = PURPOSES ( P>AGRAPH #GC7#C77A74 ,SIMIL>LY1 SUBSEC;N #BA7#A7 (! ,,ITAR DOES N APPLY 9 DET]M9+ 8PROCE$S ( 4POSI;N #AD ,,IT-#BFH;,R#D C#C O!RWISE DET]M9$0 = PURPOSES ( P>AGRAPH #GC7#C77B4#A74 #F4 ,! PROVI.NS ( SUBSEC;N #GC7#C7 APPLY ONLY IF3 7A7 ! * 0 RESID5T 9 ,CANADA IMMLY 2F ! TRANSF]2 7B7 ! PROP]TY WAS1 2F ! TRANSF]1 US$ PR9CIP,Y 9 ! BUSI;S ( F>M+ 7SEE P>AGRAPHS #BA 6#BF 2L72 & 7C7 ! P>5T1 ! P>5T'S SP\SE OR ANY ( _! *N 0 ACTIVELY 5GAG$ ON A REGUL> & 3T9U\S BASIS 9 T BUSI;S 7SEE P>AGRAPH #BG 2L74 ,! P>5T IS N REQUIR$ 6BE RESID5T 9 ,CANADA AT ANY "T4 ,9 A4I;N1 SUBSEC;N #GC7#C7 APPLIES ONLY 6PROP]TY [N$ 0! P>5T IMMLY 2F ! TRANSF] 6A * & ?US IS N APPLICA# 6PROP]TY [N$ AT T "T 0A "PN]%IP OR CORPOR,N4 ,) REG>D 6! PROP]TY TRANSF]R$1 ! L& M/ 2 CAPITAL PROP]TY (! P>5T4 ,"! >E NO REQUIRE;TS Z 6! USE (! 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FOLL[+ >E "S EXAMPLES ( SITU,NS 9 : SUBSEC;N #GC7#C7 WD APPLY1 ASSUM+ ALL 3DI;NS ( T PROVI.N >E O!RWISE MET3 7A7 A TAXPAY] MAY TRANSF] F>M PROP]TY 9 /AGES OR PIECEM1L 7"PIAL 4POSI;NS7 OV] ANY NUMB] ( YE>S4 ,! ONUS IS ON ! TAXPAY] 6E/ABLI% T A LEGAL TRANSF] IS MADE ON EA* O3A.N2 7B7 ! TRANSF] (A "P (A F>M PROP]TY 6! TAXPAY]'S SP\SE "U SUBSEC;N #GC7#A7 DOES N PRECLUDE A TRANSF] (! REMA9D] 6A * "U SUBSEC;N #GC7#C72 7C7 A TAXPAY] MAY S"E & TRANSF] 6A * F>M L& ^U : ! * MAY 3/RUCT A RESID;E2 #AI ,,IT-#BFH;,R#D B#D 7D7 A TAXPAY] MAY TRANSF] A F>M PROP]TY 6S"EAL *N 9 UNDIVID$ %>ES2 7E7 A TAXPAY] :O IS A SOLE [N] ( F>M PROP]TY MAY >RANGE = TRANSF] ( [N]%IP ( T PROP]TY 6A * 9 S* A MANN] T ! * 2COMES A JO9T T5ANT OR T5ANT 9 -MON )! TAXPAY] 9 T PROP]TY2 7F7 PROVID$ ! SUB/.E (A TRANSAC;N IS 6E6ECT ! IMM TRANSF] (! B5EFICIAL [N]%IP 7T IS1 ALL ! 9CID5TS ( TITLE S* Z POSSES.N1 USE & RISK7 (A F>M PROP]TY F A TAXPAY] 6A *1 S* TAXPAY] MAY 9 C]TA9 9/.ES 7SUBJECT 6DE"P;TAL APPROVAL ON AN 9DIVIDUAL BASIS7 TRANSF] F>M PROP]TY "U SUBSEC;N #GC7#C7 NOT)/&+ T LEGAL TITLE 9 ! PROP]TY S TRANSF]R$ 3T9UES 6BE HELD 0! TAXPAY]1 OR "S ?IRD "PY Z SECUR;Y AG/ PAY;T (! SALE PRICE ( T PROP]TY OR AG/ PAY;T (A LOAN TAK5 0! * 6PUR*ASE T PROP]TY4 ,= EXAMPLE1 ! ,DE"P;T HAS AGRE$ T SUBSEC;N #GC7#C7 CD APPLY :5 A * BORR[$ M"OY F A ,F>M ,LOAN ,BO>D 6PUR*ASE A F>M AT #BJ ,,IT-#BFH;,R#D C#D LESS ?AN FAIR M>KET VALUE F A P>5T1 &! ,BO>D REQUIR$ T ! P>5T F/ SELL T PROP]TY 6!M & !Y1 9 TURN1 WD RESELL X 6! * "U AN ,AGREE;T = ,SALE1 ?US RETA9+ TITLE 6T R1L E/ATE Z SECUR;Y AG/ ! LOAN2 7G7 A TAXPAY] MAY TRANSF] A F>M PROP]TY 6A "PN]%IP IF ALL ! "PN]S >E ! TAXPAY]'S *N2 & 7H7 A TAXPAY] MAY TRANSF] F>M L& 6A * & RETA9 A LIFE 9T]E/ 9 ! L& =! TAXPAY]1 =! SP\SE (! TAXPAY] OR =! TAXPAY] &! SP\SE JO9TLY 7SEE P>AGRAPH #G ABV74 ,SITU,NS 9 : ,SUBSEC;N #GC7#C7 ,DOES ,N ,APPLY3 #AB4 ,! FOLL[+ >E "S SITU,NS 9 : SUBSEC;N #GC7#C7 WD N APPLY3 7A7 A TAXPAY] _C TRANSF] F>M PROP]TY 6A CORPOR,N & H SUBSEC;N #GC7#C7 APPLY EV5 ?\< ALL ! %>EHOLD]S >E ! TAXPAY]'S *N2 & #BA ,,IT-#BFH;,R#D D#D 7B7 A TAXPAY] _C USE SUBSEC;N #GC7#C7 6DEF] A CAPITAL GA9 ATTRIBUTA# 6A PR9CIPAL RESID;E LOCAT$ ON1 & TRANSF]R$ )1 F>M L& 2+ TRANSF]R$ 6A * "U T SUBSEC;N 2C A PR9CIPAL RESID;E IS N A DEPRECIA# PROP]TY (A PRESCRIB$ CLASS4 ,H["E1 P>AGRAPHS #DJ7#B77B7 OR #DJ7#B77C7 CD APPLY 6S* GA9 IF ! 3DI;NS 9 ! DEF9I;N ( 8PR9CIPAL RESID;E0 9 SEC;N #ED >E MET1 7SEE ! CURR5T V].N ( ,,IT-#ABJ1 ,PR9CIPAL ,RESID;E74 ,TRU/S = ,M9ORS #AC4 ,A P>5T MAY TRANSF] PROP]TY DESCRIB$ 9 SUBSEC;N #GC7#C7 7SEE P>AGRAPH #B ABV7 OR #GC7#D7 7SEE P>AGRAPH #AD 2L7 6A TRU/ SOLELY =! B5EFIT ( 8 OR H] M9OR *4 ,H["E1 = PROP]TY TRANSF]R$ 6S* A TRU/ 6QUALIFY =A ROLLOV] "U EI ( ^? SUBSEC;NS ! FOLL[+ A4I;NAL 3DI;NS M/ 2 MET3 7A7 ! TRU/ M/ 2 IRREVOCA#2 #BB ,,IT-#BFH;,R#D E#D 7B7 ! T]MS (! TRU/ M/ PROVIDE =! PROP]TY 6BE HELD 9 TRU/ =! EXCLUSIVE B5EFIT (! * & "! M/ N 2 ANY TRU/ PROVI.N : CD H ! E6ECT ( DEPRIV+ ! * ( ANY "RS Z ! B5EFICIAL [N] (! PROP]TY2 & 7C7 ! T]MS (! TRU/ M/ PROVIDE =! 4TRIBU;N (! PROP]TY 6! * ABSOLUTELY ^U R1*+ A C]TA9 AGE &=! 4TRIBU;N ( T PROP]TY 6! *'S E/ATE ^U ! *'S D1? 2F T AGE4 ,FAMILY ,F>M ,CORPOR,NS & ,"PN]%IPS #AD4 ,SUBSEC;N #GC7#D7 APPLIES :5 A P>5T :ILE LIV+ TRANSF]S1 6HIS OR H] *1 PROP]TY T 0 IMMLY 2F ! TRANSF] A %>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N [N$ 0! P>5T OR AN 9T]E/ 9 A FAMILY F>M "PN]%IP [N$ 0! P>5T4 7,SEE P>AGRAPHS #AG #BC ,,IT-#BFH;,R#D #E & #AH 2L =A 4CUS.N ( 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 & 89T]E/ 9 A FAMILY F>M "PN]%IP0 RESPECTIVELY47 ,! * M/ 2 RESID5T 9 ,CANADA IMMLY 2F ! TRANSF]4 ,IF ! AM.T (! PROCE$S ( 4POSI;N O!RWISE DET]M9$ IS EI EQUAL 6OR FALLS 2T ! FAIR M>KET VALUE &! ADJU/$ CO/ BASE (! PROP]TY1 !N T AM.T IS DEEM$ 6BE ! P>5T'S PROCE$S ( 4POSI;N4 ,9 ANY O!R CASE1 IF ! PROCE$S ( 4POSI;N O!RWISE DET]M9$ 7SEE P>AGRAPH #AE 2L7 >E GRT] ?AN BO? ! FAIR M>KET VALUE &! ADJU/$ CO/ BASE (! TRANSF]R$ PROP]TY1 ! GRT] ( ^? AM.TS IS DEEM$ 6BE ! PROCE$S ( 4POSI;N &1 IF LESS ?AN BO? ( ^? AM.TS1 ! LESS] ( ^? AM.TS IS DEEM$ 6BE ! PROCE$S ( 4POSI;N4 ,! * IS DEEM$ 6H ACQUIR$ ! %>ES OR "PN]%IP 9T]E/ AT A CO/ EQUAL 6! P>5T'S DEEM$ PROCE$S ( 4POSI;N4 #AE4 ,3SI/5T ) P>AGRAPH #E ABV1 = PURPOSES ( SUBSEC;N #GC7#D7 ! T]M 8PROCE$S ( 4POSI;N O!RWISE DET]M9$0 G5],Y M1NS ! AM.T ( 3SID],N PD #BD ,,IT-#BFH;,R#D A#E OR PAYA# 0A * ON A TRANSF] (! ABV- M5;N$ %>ES OR "PN]%IP 9T]E/S4 ,9 A4I;N1 PURSUANT 6P>AGRAPH #GC7#D77B71 SEC;N #FI DOES N APPLY 9 DET]M9+ ! PROCE$S ( 4POSI;N ( S* PROP]TY4 #AF4 ,EV5 ?\< A "PN]%IP 9T]E/ 9 A FAMILY F>M "PN]%IP MAY H A NEGATIVE ADJU/$ CO/ BASE AT ! "T X IS TRANSF]R$ "U SUBSEC;N #GC7#D71 T NEGATIVE AM.T M/ N 2 9CLUD$ 9 ! -PUT,N (! DEEM$ PROCE$S ( 4POSI;N ( T "PN]%IP 9T]E/ "U SUBSEC;N #GC7#D74 ,9 S* A CASE1 ! DEEM$ PROCE$S ( 4POSI;N "U SUBSEC;N #GC7#D7 &! RESULTANT GA9 "U SUBSEC;N #DJ7#A7 ON 4POSI;N (! "PN]%IP 9T]E/ >E -PUT$ Z IF ! ADJU/$ CO/ BASE 7 NIL4 ,H["E1 SUBSEC;N #AJJ7#B7 WD APPLY 9 ? SITU,N 6REQUIRE T1 9 -PUT+ ! AM.T (! TRANSF]OR'S GA9 ON ! 4POSI;N (! "PN]%IP 9T]E/1 "! 2 9CLUD$1 9 A4I;N 6! AM.T (! GA9 NORM,Y -PUT$ "U SUBSEC;N #DJ7#A71 ! AM.T (! A=EM5;N$ NEGATIVE ADJU/$ CO/ BASE IMMLY 2F ! TRANSF]4 #BE ,,IT-#BFH;,R#D B#E #AG4 ,A 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 (A P]SON AT A "PICUL> "T IS DEF9$ 9 SUBSEC;N #GJ7#AJ7 6M1N A %>E (! CAPITAL /OCK (A CORPOR,N [N$ 0! P]SON AT T "T ":1 AT T "T1 ALL OR SUB/ANTI,Y ALL (! FAIR M>KET VALUE (! PROP]TY [N$ 0! CORPOR,N 0 ATTRIBUTA# TO3 7A7 PROP]TY T HAS BE5 US$ BY 7;I7 ! CORPOR,N1 7;II7 ANO!R FAMILY F>M CORPOR,N 9 : ! P]SON OR A RELAT$ FAMILY MEMB] (! P]SON 0 A %>EHOLD]1 7;III7 ! P]SON1 7;IV7 A RELAT$ FAMILY MEMB] (! P]SON1 OR 7;V7 A "PN]%IP1 AN 9T]E/ 9 : 0 AN 9T]E/ 9 A FAMILY F>M "PN]%IP (! P]SON OR (A RELAT$ FAMILY MEMB] (! P]SON1 PR9CIP,Y 9 ! C\RSE ( C>RY+ ON ! BUSI;S ( F>M+ 9 ,CANADA 9 : ! P]SON OR A RELAT$ FAMILY MEMB] (! P]SON 0 #BF ,,IT-#BFH;,R#D C#E ACTIVELY 5GAG$ ON A REGUL> & 3T9U\S BASIS2 7B7 %>ES (! CAPITAL /OCK OR 9DEBT$;S ( "O OR M CORPOR,NS ALL OR SUB/ANTI,Y ALL (! FAIR M>KET VALUE (! PROP]TY ( : 0 ATTRIBUTA# 6PROP]TY DESCRIB$ 9 P>AGRAPH #AG7C7 2L2 OR 7C7 PROP]TIES DESCRIB$ 9 P>AGRAPH #AG7A7 & 7B7 ABV4 ,9 DET]M9+ ! FAIR M>KET VALUE (A %>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N1 SUBSEC;N #GJ7#AB7 DEEMS ! FAIR M>KET VALUE (A NET 9COME /ABILIZ,N A3.T 6BE NIL4 ,=! PURPOSES ( ? P>AGRAPH & P>AGRAPH #AH 2L1 A RELAT$ FAMILY MEMB] (! P]SON IS A SP\SE1 * OR P>5T (! P]SON4 ,NOTE3 ,9 ,APRIL1 #AIIE ! ,M9I/] ( ,F9.E ISSU$ ,AM5D;TS 6! ,9COME ,TAX ,ACT & ,RELAT$ ,/ATUTES4 ,! PROPOS$ AM5D;TS 9CLUDE "O 6SUBP>AGRAPH 7A77I7 (! #BG ,,IT-#BFH;,R#D D#E DEF9I;N 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 9 SUBSEC;N #GJ7#AJ74 ,IF ! SUBP>AGRAPH IS AM5D$ Z PROPOS$1 = #AIID & SUBSEQU5T TAX,N YE>S1 X W R1D3 8! CORPOR,N OR A CORPOR,N RELAT$ 6X10 ,! PROPOS$ AM5D;T A6ECTS 7A77;I7 & 7;II7 ABV4 ,EXPLANATORY NOTES 7 ISSU$ : ELABORATE ON ! PROPOS$ AM5D;T4 ,! ,EXPLANATORY NOTES DESCRIBE T ! AM5D;T W ALL[ ! PROP]TY US$ 9 ! QUALIFY+ F>M+ BUSI;S ( "O CORPOR,N 6BE HELD N ONLY 0T CORPOR,N OR A SI/] CORPOR,N B AL 0A SUBSIDI>Y OR P>5T CORPOR,N ( T CORPOR,N4 #AH4 ,AN 89T]E/ 9 A FAMILY F>M "PN]%IP0 (A P]SON AT A "PICUL> "T IS DEF9$ 9 SUBSEC;N #GJ7#AJ7 6M1N AN 9T]E/ [N$ 0! P]SON AT T "T 9 A "PN]%IP ":1 AT T "T1 ALL OR SUB/ANTI,Y ALL (! FAIR M>KET VALUE (! PROP]TY (! "PN]%IP 0 ATTRIBUTA# TO3 7A7 PROP]TY T HAS BE5 US$ BY 7;I7 ! "PN]%IP1 #BH ,,IT-#BFH;,R#D E#E 7;II7 ! P]SON1 7;III7 A RELAT$ FAMILY MEMB] (! P]SON1 OR 7;IV7 A FAMILY F>M CORPOR,N 9 : ! P]SON OR A RELAT$ FAMILY MEMB] (! P]SON 0 A %>EHOLD]1 PR9CIP,Y 9 ! C\RSE ( C>RY+ ON ! BUSI;S ( F>M+ 9 ,CANADA 9 : ! P]SON OR A RELAT$ FAMILY MEMB] (! P]SON 0 ACTIVELY 5GAG$ ON A REGUL> & 3T9U\S BASIS2 7B7 %>ES (! CAPITAL /OCK OR 9DEBT$;S ( "O OR M CORPOR,NS ALL OR SUB/ANTI,Y ALL (! FAIR M>KET VALUE (! PROP]TY ( : 0 ATTRIBUTA# 6PROP]TY DESCRIB$ 9 P>AGRAPH #AH7C7 2L2 OR 7C7 PROP]TIES DESCRIB$ 9 P>AGRAPH #AH7A7 & 7B7 ABV4 --------------------------------------#F #AI4 ,X IS A "Q ( FACT 6BE DET]M9$ ON AN 9DIVIDUAL BASIS :E!R1 = PURPOSES (! DEF9I;NS ( 89T]E/ 9 A FAMILY F>M "PN]%IP0 & 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 9 SUBSEC;N #BI ,,IT-#BFH;,R#D A#F #GJ7#AJ71 8ALL OR SUB/ANTI,Y ALL0 (! PROP]TY (A CORPOR,N OR "PN]%IP IS ATTRIBUTA# 6QUALIFY+ USE4 ,H["E1 IF #IJ@3P 9 T]MS ( FAIR M>KET VALUE (! PROP]TY (A FAMILY F>M CORPOR,N OR FAMILY F>M "PN]%IP IS US$ PR9CIP,Y 9 QUALIFY+ USE1 !N ! 8ALL OR SUB/ANTI,Y ALL0 REQUIRE;T W 2 3SID]$ 6H BE5 MET4 ,TRANSF]S 6,P>5T #BJ4 ,IF PROP]TY : 0 ACQUIR$ 0A * "U SUBSEC;N #GC7#C7 OR #GC7#D7 HAS BE5 TRANSF]R$ OR 4TRIBUT$ 6HIS OR H] P>5T Z A 3SEQU;E (! *'S D1?1 ! *'S LEGAL REPRES5TATIVE MAY ELECT "U SUBSEC;N #GJ7#I.F7 9 ! F9AL RETURN 6H ! ROLLOV] PROVI.NS ( SUBSEC;N #GJ7#I7 OR #GJ7#I.B7 APPLY4 ,SEE ! CURR5T V].N ( ,,IT-#CDI1 ,9T]G5],NAL ,TRANSF]S ( ,F>M ,PROP]TY ON ,D1? =A 4CUS.N ( SUBSEC;NS #GJ7#I71 7#I.B7 & 7#I.F74 #CJ ,US$ ,PR9CIP,Y 9 ! ,BUSI;S ( B#F ,F>M+ 0A ,P>5T1 OR 0HIS OR H] ,SP\SE OR ,* #BA4 ,) REG>D 6P>AGRAPHS #F & #AI ABV1 = PURPOSES ( SUBSEC;N #GC7#C7 &! DEF9I;NS ( 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 & 89T]E/ 9 A FAMILY F>M "PN]%IP0 9 SUBSEC;N #GJ7#AJ71 X IS ALW A "Q ( FACT :E!R A "PICUL> PROP]TY 7= EXAMPLE1 L& OR DEPRECIA# PROP]TY (A PRESCRIB$ CLASS7 IS US$ PR9CIP,Y 9 A F>M+ BUSI;S4 ,9 RESOLV+ ? "Q ! USE (! PROP]TY Z A :OLE M/ 2 3SID]$4 #BB4 ,G5],Y1 = PURPOSES ( SUBSEC;N #GC7#C7 &! DEF9I;NS ( 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 & 89T]E/ 9 A FAMILY F>M "PN]%IP0 9 SUBSEC;N #GJ7#AJ71 A PROP]TY IS US$ PR9CIP,Y 9 A F>M+ BUSI;S IF XS PRIM>Y USE 7T IS1 M ?AN #EJ@3P ( XS USE7 IS 9 RESPECT (! F>M+ BUSI;S OP],N Z OPPOS$ 6USE 9 3CURR5T CORPORATE OR "PN]%IP OP],NS T MAY EV5 2 ANCILL>Y OR RELAT$ 6! #CA ,,IT-#BFH;,R#D C#F F>M+ OP],N S* Z1 = EXAMPLE1 /ORAGE OR TRUCK+ ( F>M PRODUCTS = O!RS OR 3TRACT H>VE/+4 ,9 ? 3TEXT A RESID;E [N$ 0A CORPOR,N W 2 REG>D$ Z US$ PR9CIP,Y 9 ! C\RSE ( C>RY+ ON ! BUSI;S ( F>M+ IF M ?AN #EJ@3P ( XS USE IS Z A3OMMOD,N = P]SONS :O >E ACTIVELY EMPLOY$ 9 ! F>M+ BUSI;S OR _! DEP5DANTS4 ,FUR!RMORE1 ! RESID;E M/ 2 PROVID$ 6! P]SONS 9 _! CAPAC;Y Z EMPLOYEES R ?AN Z %>EHOLD]S &! RESID;E M/ 2 "P (! BUSI;S OP],N 9 T X PROVIDES A3OMMOD,N = EMPLOYEES ^: S]VICES MAY 2 REQUIR$ AT VIRTU,Y ANY "T 0VIRTUE (! NATURE (! F>M+ OP],NS4 ,IF ! #EJ@3P F>M+ BUSI;S USAGE TE/ IS N MET 0A "PICUL> PROP]TY !N X W 2 9CLUD$ 9 ! GR\P ( PROP]TY ACQUIR$ = 9VE/;T OR NON-QUALIFI$ USES4 #BC4 ,X IS AL A "Q ( FACT :E!R A "PICUL> F>M+ OP],N 3/ITUTES A F>M+ BUSI;S AT ANY "PICUL> "T4 ,"S (! CRIT]IA : %D 2 3SID]$ 9 MAK+ ? DET]M9,N >E SET \ 9 ! CURR5T V].N ( ,,IT-#CBB1 ,F>M ,LOSSES4 ,AN A4I;NAL CRIT]ION EXI/S 9 #CB ,,IT-#BFH;,R#D D#F CASES ": F>M+ OP],NS H N BE5 "UTAK5 PREVI\SLY1 OR AT L1/ 9 REC5T YE>S1 ON PROP]TY [N$ 0AN 9DIVIDUAL1 A FAMILY F>M CORPOR,N OR A FAMILY F>M "PN]%IP 7SEE P>AGRAPHS #AG & #AH ABV74 ,9 S* CASES1 2F ! ROLLOV] PROVI.NS ( SUBSEC;N #GC7#C7 OR #GC7#D7 C APPLY1 IF A NEW F>M+ OP],N HAS BE5 9ITIAT$1 :E!R SPECIFIC,Y 9 ANTICIP,N (A ROLLOV] "U "O ( ^? PROVI.NS OR N1 9 ORD] 6E/ABLI% T A F>M+ BUSI;S IS 2+ C>RI$ ON ALL (! "W ASSOCIAT$ )& REQUIR$ 69ITIATE A VIA# F>M+ BUSI;S %D 2 9/ITUT$ & -PLET$ 6! EXT5T X IS R1SONABLY POSSI# 6D S 9 A GIV5 FACT SITU,N4 #BD4 ,ASSUM+ T A F>M+ BUSI;S IS 2+ C>RI$ ON & T ! PROP]TY IS 9 FACT US$ 9 T F>M+ BUSI;S1 X AL M/ 2 DET]M9$ ON A FACT BASIS :E!R A "PICUL> TAXPAY]1 OR ! SP\SE OR * (! TAXPAY]1 IS C>RY+ ON T "PICUL> F>M+ BUSI;S4 ,9 ? REG>D1 A TAXPAY]1 A SP\SE OR A * IS 3SID]$ 6BE C>RY+ ON A "PICUL> F>M+ BUSI;S #CC ,,IT-#BFH;,R#D E#F :5 T P]SON1 6! EXT5T T ! CIRCUM/.ES (! "PICUL> F>M+ OP],N ALL[1 DET]M9ES1 = EXAMPLE1 : FIELDS W 2 PLANT$1 ! TYPE ( CROPS 6BE SE$$ &! "TS = SPRAY+ & H>VE/+4 ,! FACT T ! S]VICES ( ANO!R P]SON MAY 2 5GAG$ =A NEGOTIAT$ SUM ( M"OY 6"UTAKE ALL OR "P (! "W ASSOCIAT$ )! F>M+ ACTIV;Y 7A REL,N%IP -MONLY REF]R$ 6Z 8CU/OM "W+07 WD N 4QUALIFY A TAXPAY] 7F>M [N]7 F ROLL+ F>M PROP]TY 6A * "U SUBSEC;N #GC7#C74 ,SUBSEC;N #GC7#C7 /ATES1 9 "P1 T 8''' ! PROP]TY WAS1 2F ! TRANSF]1 US$ PR9CIP,Y 9 ! BUSI;S ( F>M+ ''' 40 ,"! IS NO REQUIRE;T T ! PROP]TY 2 US$ IMMLY 2F ! TRANSF] 9 ! BUSI;S ( F>M+4 ,H["E1 IF ! PROP]TY IS US$ = "S PURPOSE O!R ?AN F>M+ = "S P]IOD ( "T1 A "Q MAY >ISE Z 6:E!R ! PROP]TY 0 US$ PRIM>ILY = T O!R PURPOSE R ?AN 9 ! BUSI;S ( F>M+4 #BE4 ,A LESSOR ( F>M PROP]TY IS N 3SID]$ 6BE US+ ! PROP]TY 9 ! BUSI;S ( F>M+4 ,?US1 ! PROP]TY : IMMLY 2F ! TRANSF] 0 L1S$ 6ANO!R P]SON 79CLUD+ A #CD ,,IT-#BFH;,R#D F#F %>ECROPP]7 IS N ELIGI# = TRANSF] "U SUBSEC;N #GC7#C7 UN.S X 0 US$ PR9CIP,Y 9 ! BUSI;S ( F>M+ 0A LESSEE :O IS ! SP\SE OR * (! LESSOR &! LESSEE 0 ACTIVELY 5GAG$ 9 ! BUSI;S ON A REGUL> & 3T9U\S BASIS4 #BF4 ,9 ! PREC$+ P>AGRAPH 8%>ECROPP]0 M1NS A F>M] :O IS A T5ANT & GIVES A %>E (! CROP 6! L&"L 9 LIEU ( R5T4 ,"! MAY 2 O!R TYPES ( >RANGE;TS1 = EXAMPLE1 :5 AN 9DIVIDUAL IS ACTU,Y AN EMPLOYEE (! [N] (! F>M & N A T5ANT & RCVS A %>E (! CROP Z A REMUN],N = S]VICES --------------------------------------#G R5D]$4 ,"U S* AN >RANGE;T1 ! F>M PROP]TY MAY 2 ELIGI# = TRANSF] "U SUBSEC;N #GC7#C74 #CE ,ACTIVELY ,5GAG$ ON A A#G ,REGUL> & ,3T9U\S ,BASIS #BG4 ,SUBSEC;N #GC7#C7 &! DEF9I;NS 9 SUBSEC;N #GJ7#AJ7 ( 8%>ES (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 & 89T]E/ 9 A FAMILY F>M "PN]%IP0 REQUIRE T A P]SON 2 8ACTIVELY 5GAG$ ON A REGUL> & 3T9U\S BASIS0 9 ! BUSI;S ( F>M+4 ,:E!R A P]SON IS 8ACTIVELY 5GAG$ ON A REGUL> & 3T9U\S BASIS0 IS A "Q ( FACT4 ,H["E1 ! REQUIRE;T IS 3SID]$ 6H BE5 MET :5 ! P]SON IS 8ACTIVELY 5GAG$0 9 ! MANAGE;T &/OR "D 6"D ACTIVITIES (! F>M+ BUSI;S4 ,ORD9>ILY ! P]SON WD 2 EXPECT$ 63TRIBUTE "T1 LAB\R & ATT5;N 6! BUSI;S 6A SU6ICI5T EXT5T T S* 3TRIBU;NS WD 2 DET]M9ANT 9 ! SU3ESS;L OP],N (! BUSI;S4 ,:E!R AN ACTIV;Y IS 5GAG$ ON A 8REGUL> & 3T9U\S BASIS0 IS AL A "Q ( FACT B AN ACTIV;Y T IS 9FREQU5T OR ACTIVITIES T >E FREQU5T B "UTAK5 AT IRREGUL> 9T]VALS WD N MEET ! REQUIRE;T4 ,IF F>M+ IS N ! *IEF S\RCE ( 9COME1 T IS1 SUBSEC;N #CA7#A7 #CF ,,IT-#BFH;,R#D B#G APPLIES1 X MAY 2 M DI6ICULT 6DEMON/RATE T ! TAXPAY]1 ! TAXPAY]'S SP\SE OR ! TAXPAY]'S * 0 ACTIVELY 5GAG$ ON A REGUL> & 3T9U\S BASIS 9 ! BUSI;S ( F>M+4 ,RES]VES #BH4 ,IF A TAXPAY] TRANSF]S PROP]TY 6A * AT AN AM.T 9 EXCESS ( XS ADJU/$ CO/ BASE & SUBSEC;N #GC7#C7 OR #GC7#D7 APPLIES1 A RES]VE MAY 2 CLAIM$ "U SUBP>AGRAPH #DJ7#A77A77;III7 =! UNCOLLECT$ PROCE$S -PUT$ Z DESCRIB$ 9 ! CURR5T V].N ( ,,IT-#BCF1 ,RES]VES-- ,4POSI;N ( ,CAPITAL ,PROP]TY4 ,PURSUANT 6SUBSEC;N #DJ7#A.A71 9 XS APPLIC,N 6TRANSF]S ( F>M PROP]TY 7Z DESCRIB$ 9 P>AGRAPH #B ABV7 &A %>E (A FAMILY F>M CORPOR,N OR AN 9T]E/ 9 A FAMILY F>M "PN]%IP 6A * :O 0 RESID5T 9 ,CANADA IMMLY 2F ! TRANSF]1 ? RES]VE IS LIMIT$ 6A MAXIMUM P]IOD ( #I YE>S4 ,9 -PUT+ ! TAXPAY]'S CAPITAL #CG ,,IT-#BFH;,R#D C#G GA9S OV] ? P]IOD AT L1/ #A OV] #AJ (! CAPITAL GA9 ON 4POSI;N M/ 2 9CLUD$ 9 ! YE> ( 4POSI;N1 & AT L1/ #A OV] #AJ ( T GA9 M/ 2 9CLUD$ 9 -PUT+ ! TAXPAY]'S CAPITAL GA9S = EA* (! #I SUBSEQU5T TAX,N YE>S SUBJECT1 ( C\RSE1 6ANY OV]RID+ E6ECT (! APPLIC,N ( CLAUSE #DJ7#A77A77;III77,A7 =! CALCUL,N (! R1SONA# RES]VE1 Z DESCRIB$ 9 ! CURR5T V].N ( ,,IT-#BCF1 : MIE DEEM$ 6BE ^? (! TAXPAY]4 ,SUBSEC;N #GE.A7#A7 DOES N APPLY1 IF3 #CH ,,IT-#BFH;,R#D D#G 7A7 ! TAXPAY] IS D1D OR NO L;G] RESID5T 9 ,CANADA AT ! "T (! 4POSI;N 0! *2 7B7 ! * ATTA9S ! AGE ( #AH YE>S 2F ! 5D (! TAX,N YE> 9 : ! 4POSI;N TAKES PLACE2 OR 7C7 ! TRANSF] 6! * 0 MADE AT N LESS ?AN ! FAIR M>KET VALUE (! PROP]TY IMMLY 2F T TRANSF]4 ,PROP]TY T IS L& 9 ,CANADA1 DEPRECIA# PROP]TY 9 ,CANADA (A PRESCRIB$ CLASS1 A %>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N1 OR AN 9T]E/ 9 A FAMILY F>M "PN]%IP IS SUBJECT 6SUBSEC;N #GE.A7#A74 #CJ4 ,= TRANSF]S & LOANS ( PROP]TY ! RULES 9 SUBSEC;N #GD.A7#B7 APPLY 6ATTRIBUTE 6A TAXPAY] 9COME 7B N BUSI;S 9COME7 F F>M PROP]TY 7Z DESCRIB$ 9 P>AGRAPH #B ABV71 AN 9T]E/ 9 A FAMILY F>M "PN]%IP OR A %>E 9 A FAMILY F>M CORPOR,N1 OR PROP]TY SUB/ITUT$ "!=1 TRANSF]R$ 6& [N$ 0A RELAT$ M9OR4 ,! CURR5T V].N ( #CI ,,IT-#BFH;,R#D E#G ,,IT-#EAJ1 ,TRANSF]S & ,LOANS ( ,PROP]TY MADE AF ,MAY #BB1 #AIHE 6A ,RELAT$ ,M9OR 4CUSSES ! 9COME ATTRIBU;N RULES Z !Y A6ECT RELAT$ M9ORS4 ,,ITAR ,PROVI.NS--,L& #CA4 ,IF ! F>M L& TRANSF]R$1 : IS SUBJECT 6! PROVI.NS ( SUBSEC;N #GC7#C71 0 [N$ 0! TAXPAY] ON ,DECEMB] #CA1 #AIGA 7OR IF A P]SON :O DID N D1L AT >M'S L5G? )! TAXPAY] [N$ ! PROP]TY ON ,JUNE #AH1 #AIGA & NO >M'S L5G? [N]S 9T]V5$ 6! DATE ( S* TRANSF]71 SUBSEC;NS #BF7#C7 & #BF7#E7 (! ,,ITAR PRES]VE ! TAX-FREE Z"O 9 ! USUAL WAY 7SEE ! CURR5T V].N ( ,,IT-#ACB1 ,CAPITAL ,PROP]TY ,[N$ ON ,DECEMB] #CA1 #AIGA--,NON-,>M'S ,L5G? ,TRANSAC;NS1 & SUBSEC;N #BF7#AI7 (! ,,ITAR74 #DJ ,,ITAR ,PROVI.NS--,DEPRECIA# F#G ,PROP]TY (A ,PRESCRIB$ ,CLASS #CB4 ,SUBSEC;N #BJ7#A7 (! ,,ITAR MAY PRES]VE ! TAX-FREE Z"O = DEPRECIA# PROP]TY (A PRESCRIB$ CLASS TRANSF]R$ "U SUBSEC;N #GC7#C71 :5 ! TAXPAY]'S DEEM$ PROCE$S ( 4POSI;N EXCE$ ! PROP]TY'S CAPITAL CO/ 7SEE ! CURR5T V].N ( ,,IT-#BAG1 ,CAPITAL ,PROP]TY ,[N$ ON ,DECEMB] #CA1 #AIGA-- ,DEPRECIA# ,PROP]TY74 ,,ITAR ,PROVI.NS--,ELIGI# ,CAPITAL ,PROP]TY #CC4 ,SUBSEC;N #BA7#A7 (! ,,ITAR HAS NO APPLIC,N 9 DET]M9+ ! AM.T (A P>5T- TRANSF]OR'S DEEM$ PROCE$S ( 4POSI;N ( ELIGI# CAPITAL PROP]TY "U P>AGRAPH #GC7#C77B4#A7 (! ,ACT4 ,H["E1 ONCE S* AN AM.T IS -PUT$ "U P>AGRAPH #GC7#C77B4#A71 T AM.T REPRES5TS AN AM.T PAYA# = PURPOSES ( SEC;N #AD (! ,ACT 7IN "PICUL> ;,E (! DEF9I;N #DA ,,IT-#BFH;,R#D G#G ( 8CUMULATIVE ELIGI# CAPITAL0 9 SUBSEC;N #AD7#E77 & C 2 REDUC$ BY --------------------------------------#H ! PROVI.NS ( SUBSEC;N #BA7#A7 (! ,,ITAR IF ! 3DI;NS ( T SUBSEC;N >E O!RWISE MET4 ,:5 SUBSEC;N #BA7#A7 ( ,,ITAR APPLIES 6REDUCE ! AM.T PAYA#1 ! *-TRANSF]EE'S CO/ ( ACQUISI;N (! ELIGI# CAPITAL PROP]TY 7SEE P>AGRAPH #GC7#C77D4#A7 (! ,ACT7 IS SUBJECT 6A SIMIL> REDUC;N "U SUBSEC;N #BA7#B7 ( ,,ITAR S9CE ! * ACQUIRES T PROP]TY 9 A NON->M'S L5G? TRANSAC;N4 ,,ITAR ,PROVI.NS--,FAMILY ,F>M ,CORPOR,NS #CD4 ,IF A TAXPAY] [N$ %>ES (! CAPITAL /OCK (A FAMILY F>M CORPOR,N ON ,JUNE #AH1 #AIGA & 3T9U\SLY "!AF UNTIL ! "T ( TRANSF] 6A * AF #AIGA1 !N SUBSEC;N #BF7#E7 (! ,,ITAR WD APPLY 6PRES]VE T TAXPAY]'S TAX-FREE Z"O 6! * IF ! O!R PROVI.NS ( T SUBSEC;N >E MET4 #DB ,,IT-#BFH;,R#D A#H ,H["E1 IF ! TAXPAY] ACQUIR$ S* %>ES 2T ,JUNE #AI1 #AIGA & ,DECEMB] #CA1 #AIGA & TRANSF]S !M AF #AIGA 9 A NON->M'S L5G? TRANSAC;N 6: SUBSEC;N #GC7#D7 (! ,ACT APPLIES 7SEE P>AGRAPH #AD ABV71 SUBSEC;N #BF7#E7 (! ,,ITAR IS TE*NIC,Y N APPLICA# & "! IS NO PROVI.N SIMIL> 6SUBSEC;N #BF7#AI7 (! ,,ITAR 7SEE P>AGRAPH #CA ABV7 6PRES]VE ! TAX-FREE Z"O ON ^? %>ES4 ,N"E!.S1 X IS ! ,DE"P;T'S PRACTICE N 6DEPRIVE ! * 9 S* A SITU,N (! B5EFIT (! TAX-FREE Z"O4 ,3SEQU5TLY1 ! ,DE"P;T W P]MIT S* A TRANSF]EE 7*7 6USE SUBSEC;NS #BF7#E7 & RELAT$ SUBSEC;N #BF7#C7 (! ,,ITAR 9/1D ( P>AGRAPH #GC7#D77C7 (! ,ACT 6E/ABLI% ! ADJU/$ CO/ BASE ( S* %>ES TRANSF]R$ :E!R 0GIFT OR 9 ANY O!R MANN]4 #DC ,PROP]TY ,DEPRECIA# B#H ,PURSUANT 6,"P ,,XVII #CE4 ,PROP]TY ON : A P>5T IS CLAIM+1 OR HAS CLAIM$1 CAPITAL CO/ ALL[.E ONLY "U ,"P ,,XVII (! ,9COME ,TAX ,REGUL,NS 2F MAK+ AN 9T] VIVOS TRANSF] "!( 6HIS OR H] * DOES N QUALIFY =A ROLLOV] "U SUBSEC;N #GC7#C7 (! ,ACT4 ,9/1D1 ! P>5T'S PROCE$S ( 4POSI;N ( S* PROP]TY M/ 2 -PUT$ EI "U SUBSEC;N #BJ7#A7 (! ,,ITAR OR1 IF ! 3DI;NS ( T SUBSEC;N >E N MET1 "U SEC;N #FI (! ,ACT4 ,9 ANY CASE ": SUBSEC;N #BJ7#A7 ( ,,ITAR APPLIES 6DET]M9E A P>5T'S DEEM$ PROCE$S ( 4POSI;N ( ,"P ,,XVII PROP]TY T SUBSEC;N W AL PRES]VE ! P>5T'S TAX- FREE Z"O = S* PROP]TY 6HIS OR H] *4 7,SEE ! CURR5T V].N ( ,,IT-#BAG47 #CF4 ,ONCE ,"P ,,XVII PROP]TY IS TRANSF]R$ 0A P>5T 6HIS OR H] * AF #AIGA1 IF X IS DEPRECIA# PROP]TY (! *1 X IS REQUIR$ 6BE 9CLUD$ 9 A PRESCRIB$ CLASS "U ,"P ,,XI (! ,REGUL,NS1 S9CE PROP]TY ACQUIR$ AF #AIGA MAY N 2 #DD ,,IT-#BFH;,R#D C#H DEPRECIAT$ PURSUANT 6,"P ,,XVII (! ,REGUL,NS4 #CG4 ,NOT)/&+ T A L1SEHOLD 9T]E/ 9 L& US$ 9 A F>M+ BUSI;S 7:5 T L1SEHOLD 9T]E/ 0 ACQUIR$ PRIOR 6#AIGB & CAPITAL CO/ ALL[.E 0 CLAIM$ "!ON ONLY "U ,"P ,,XVII (! ,REGUL,NS7 IS TE*NIC,Y N DEPRECIA# PROP]TY (A PRESCRIB$ CLASS1 ! ,DE"P;T W N"E!.S A3EPT X Z QUALIFY+ =A ROLLOV] "U SUBSEC;N #GC7#C7 (! ,ACT IF ! TAXPAY]S 9VOLV$ S REQUE/ 9 WRIT+4 --------------------------------------#I ,EXPLAN,N ( ,*ANGES ,9TRODUC;N ,! PURPOSE (! ,EXPLAN,N ( ,*ANGES IS 6GIVE ! R1SONS =! REVI.NS 6AN 9T]PRET,N BULLET94 ,X \TL9ES REVI.NS T WE H MADE Z A RESULT ( *ANGES 6! LAW1 Z WELL Z *ANGES REFLECT+ NEW OR REVIS$ DE"P;TAL 9T]PRET,NS4 #DE ,OV]VIEW A#I ,:5 A TAXPAY] 4POSES ( ANY?+ 6A P]SON ) :OM ! TAXPAY] DOES N D1L AT >M'S L5G? = PROCE$S ( 4POSI;N T >E LESS ?AN ! FAIR M>KET VALUE1 ! G5]AL RULE IS ! TAXPAY] IS DEEM$ 6RCV PROCE$S ( 4POSI;N EQUAL 6T FAIR M>KET VALUE4 ,! BULLET9 DESCRIBES EXCEP;NS 6! G5]AL RULE T MAY APPLY :5 A P>5T1 :ILE LIV+1 TRANSF]S F>M PROP]TY1 %>ES (! CAPITAL /OCK (A FAMILY F>M CORPOR,N OR AN 9T]E/ 9 A FAMILY F>M "PN]%IP 6HIS OR H] *4 ,! BULLET9 REFLECTS AM5D;TS 6! ,9COME ,TAX ,ACT RESULT+ F ,S4,C4 #AIID1 C4#G1 ,S*$ULE ,,VIII 7,S4,C4 #AIIC1 C4#BD-- =M]LY ,BILL ;,C-#IB7 & ,S4,C4 #AIIE1 C4#C 7=M]LY ,BILL ;,C-#EI7 & MAKES 9CID5TAL *ANGES4 ,A ,NOTE HAS BE5 A4$ FOLL[+ P>AGRAPH #AG 6DESCRIBE A PROPOS$ AM5D;T 6! DEF9I;N (A 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 3TA9$ 9 ! ,AM5D;TS 6! ,9COME ,TAX ,ACT & ,RELAT$ ,/ATUTES ( ,APRIL #AIIE4 #DF ,LEGISLATIVE & ,O!R ,*ANGES B#I ,A ,SUMM>Y HAS BE5 A4$ 6BRIEFLY DESCRIBE ! PURPOSE (! BULLET94 ,! -;TS 9 ! P>AGRAPH #A ( ,,IT-#BFH;,R#C H BE5 TRANSF]R$ 6! ,SUMM>Y4 ,P>AGRAPH #A 7P>AGRAPH #B ( ,,IT-#BFH;,R#C7 HAS BE5 EXP&$ 6DESCRIBE ! M1N+ ( 8P>5T0 & 8SP\SE0--: 9CLUDES :AT IS G5],Y REF]R$ 6Z A 8-MON-LAW0 SP\SE4 ,P>AGRAPH #B 7P>AGRAPH #C ( ,,IT-#BFH;,R#C7 REFLECTS A ,BILL ;,C-#IB AM5D;T 6P>AGRAPH #GC7#C77B4#A7--ELIGI# CAPITAL PROP]TY4 ,A DESCRIP;N ( CLAUSES #GC7#C77A77II77,B7 & #GC7#C77B4#A77II77,B7 HAS BE5 A4$4 ,P>AGRAPH #F 7P>AGRAPH #G ( ,,IT-#BFH;,R#C7 REFLECTS TWO ,BILL ;,C-#IB AM5D;TS 6SUBSEC;N #GC7#C74 ,! AM5D;TS REQUIRE T 2F ! 9T] VIVOS TRANSF] F A P>5T 6! * ! PROP]TY M/ 2 US$ PR9CIP,Y 9 ! BUSI;S ( F>M+ & T "O OR M (! P>5T1 ! P>5T'S SP\SE OR ANY ( _! *N 2 ACTIVELY 5GAG$ ON A REGUL> & 3T9U\S BASIS 9 T BUSI;S4 #DG ,,IT-#BFH;,R#D C#I ,P>AGRAPH #H 7P>AGRAPH #AJ ( ,,IT-#BFH;,R#C7 REFLECTS A ,BILL ;,C-#IB AM5D;T 6P>AGRAPH #GC7#C77D4#A7 &! A4I;N (A 4CUS.N ( P>AGRAPH #GC7#C77D4#B71 Z A4$ 6! ,ACT 0,BILL ;,C-#IB & AM5D$ 0,BILL ;,C-#EI4 ,P>AGRAPH #AJ 7P>AGRAPH #AD ( ,,IT-#BFH;,R#C7 HAS BE5 REVIS$ 6DELETE -;T>Y : IS NO L;G] RELEVANT4 ,P>AGRAPH #AG 7P>AGRAPH #BF ( ,,IT-#BFH;,R#C7 REFLECTS AN AM5D;T 9 ,BILL ;,C-#IB 6! DEF9I;N ( 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N40 ,A ,NOTE HAS BE5 A4$ FOLL[+ ! P>AGRAPH 6REFLECT A PROPOS$ AM5D;T 6T DEF9I;N T IS 3TA9$ 9 ! ,AM5D;TS 6! ,9COME ,TAX ,ACT & ,RELAT$ ,/ATUTES ( ,APRIL1 #AIIE4 ,P>AGRAPH #AH 7P>AGRAPH #BG ( ,,IT-#BFH;,R#C7 REFLECTS ,BILL ;,C-#IB AM5D;TS 6! DEF9I;N ( 89T]E/ 9 A FAMILY F>M "PN]%IP40 ,P>AGRAPH #AI 7"P ( P>AGRAPH #BI ( ,,IT-#BFH;,R#C7 REFLECTS AM5D;TS 6! DEF9I;NS ( 89T]E/ 9 A FAMILY F>M #DH ,,IT-#BFH;,R#D D#I "PN]%IP0 & 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 9 SUBSEC;N #GJ7#AJ7 S T 9 DET]M9+ :E!R AN 5T;Y FITS ! DEF9I;N1 ! PROP]TY (! 5T;Y W 2 VALU$ AT FAIR M>KET VALUE R ?AN CO/4 ,P>AGRAPH #BJ 7P>AGRAPH #H ( ,,IT-#BFH;,R#C7 HAS BE5 EXP&$ 69CLUDE REF];ES 6SUBSEC;NS #GJ7#I.B7 & #GC7#D74 ,P>AGRAPH #BA 7"P ( P>AGRAPH #AE ( ,,IT-#BFH;,R#C7 HAS BE5 REVIS$ 6NOTE T 9 SUBSEC;N #GC7#C7 & 9 ! DEF9I;NS ( 89T]E/ 9 A FAMILY F>M "PN]%IP0 & 8%>E (! CAPITAL /OCK (A FAMILY F>M CORPOR,N0 9 SUBSEC;N #GJ7#AJ71 ! PROP]TY M/ 2 US$ PR9CIP,Y 9 ! BUSI;S ( F>M+4 ,A -;T HAS AL BE5 A4$ 6! P>AGRAPH NOT+ T ! :OLE PROP]TY M/ 2 3SID]$ 9 DET]M9+ :E!R X IS US$ PR9CIP,Y 9 A F>M+ BUSI;S4 ,P>AGRAPH #BB 7"P ( P>AGRAPH #BI ( ,,IT-#BFH;,R#C7 HAS BE5 EXP&$ 6ADD FUR!R -;TS ON A RESID;E [N$ 0A FAMILY F>M CORPOR,N4 ,P>AGRAPH #BD 7"P ( P>AGRAPH #AE ( ,,IT-#BFH;,R#C7 HAS BE5 EXP&$ #DI ,,IT-#BFH;,R#D E#I 6NOTE T :ILE "! IS NO L;G] A REQUIRE;T 9 SUBSEC;N #GC7#C7 T ! PROP]TY 2 US$ 9 F>M+ IMMLY 2F A TRANSF]1 IF ! PROP]TY HAS BE5 US$ = "S O!R PURPOSE 2T ! "T ! F>M+ BUSI;S C1S$ &! TRANSF] 0 MADE1 A "Q MAY >ISE Z 6:E!R ! SUBSEC;N APPLIES4 ,P>AGRAPH #BE 7P>AGRAPH #AF ( ,,IT-#BFH;,R#C7 HAS BE5 REVIS$ 6REFLECT T SUBSEC;N #GJ7#I.H7 IS NO L;G] RELEVANT 6SUBSEC;N #GC7#C7 2C ( AM5D;TS 6! LATT] SUBSEC;N 9 ,BILL ;,C-#IB4 ,NEW P>AGRAPH #BG 3TA9S "S OBS]V,NS ON ! EXPRES.N 8ACTIVELY 5GAG$ ON A REGUL> & 3T9U\S BASIS40 ,P>AGRAPH #BI 7P>AGRAPH #CB ( ,,IT-#BFH;,R#C7 3SOLIDATES ! P>AGRAPH &! ,NOTE : FOLL[$ ! P>AGRAPH 3C]N+ ! ,BILL ;,C-#AH AM5D;T 6SUBSEC;N #GE.A7#A74 -------------------------------------#AJ ,P>AGRAPHS #AB1 #AC & #CJ ( ,,IT-#BFH;,R#C 7 N C>RI$ =W>D Z ! LAW : !Y DESCRIBE 0 REP1L$ 0,S4,C4 #AIHF1 C4#F4 7=M]LY ,BILL ;,C-#HD74 P>AGRAPH #CA ( ,,IT-#BFH;,R#C 0 N C>RI$ #EJ ,,IT-#BFH;,R#D A#AJ =W>D P5D+ ! REVIEW (! AM5D;TS 6SEC;N #HJ 9 ,S4,C4 #AIIE1 C4#BA 7=M]LY ,BILL ;,C-#GJ74 ,"?\T ! BULLET9 WE H REVIS$ "S (! ^W+ 9 ORD] 6IMPROVE R1DABIL;Y )\T ALT]+ ! SUB/.E & REORGANIZ$ ! ORD] (! P>AGRAPHS 6IMPROVE COHESIVE;S4 #EA