,CANADA ,CU/OMS
            & ,REV5UE ,AG5CY

              ,9COME ,TAX
          ,9T]PRET,N ,BULLET9
             ,,IT-#CJB;,R#C

             ,9 ,"O ,VOLUME
           ,PR9T ,PAGES #A-BG
      ,BRL ,PAGES ;I-;III & #A-FE
    
































                 ,9DEX
    
                               ,BRL PAGE
,APPLIC,N """"""""""""""""""""""""""" #B
,SUMM>Y """"""""""""""""""""""""""""" #B
,4CUS.N & ,9T]PRET,N """""""""""""""" #F
  ,ACQUISI;N ( ,3TROL """"""""""""""" #F
    ,9TRODUC;N """""""""""""""""""""" #F
    ,M1N+ ( ,3TROL (A ,CORPOR,N """"" #G
    ,3TROL 0A ,GR\P ( ,P]SONS """"""" #H
    ,ACT+ 9 ,3C]T """"""""""""""""""" #I
    ,ACQUISI;NS & ,4POSALS (A
      ,M9OR;Y ,9T]E/ """"""""""""""" #AA
    ,": ,3TROL (A ,CORPOR,N IS
      ,DEEM$ ,N 6,H ,BE5 ,ACQUIR$ "" #AC
    ,ACQUISI;NS ( ,3TROL ,RELAT$
      6,*ANGES 9 ,EXECUTORS1
      ,TRU/EES1 ETC4 ( ,E/ATES """"" #AG
    ,TAX,N ,YE> ,5D ,2F ,ACQUISI;N
      ( ,3TROL """"""""""""""""""""" #AH
  ,RE/RIC;NS ON ,LOSS ,UTILIZ,N 0A
    ,CORPOR,N ,FOLL[+ AN
    ,ACQUISI;N ( ,3TROL """""""""""" #BJ
    ,NET ,CAPITAL ,LOSSES """""""""" #BJ
                                      ;I
                 ,9DEX
    ,NON-,CAPITAL ,LOSSES & ,F>M
      ,LOSSES--,/R1M+ ,RULES """"""" #BJ
    ,A3RU$ ,LOSSES ON ,CAPITAL
      ,PROP]TY """"""""""""""""""""" #BH
    ,A3RU$ ,T]M9AL ,LOSSES """"""""" #CB
    ,A3RU$ ,LOSSES ,) ,RESPECT
      6,CUMULATIVE ,ELIGI#
      ,CAPITAL """"""""""""""""""""" #CC
    ,RES]VES ,= ,D\BT;L ,A3.TS """"" #CE
    ,*ANGE 9 ,TAX ,/ATUS """"""""""" #CF
    ,A3RU$ ,LOSSES 9 ,9V5TORY """""" #CF
    ,ANTI-AVOID.E ,RULES """"""""""" #CG
  ,LOSS ,UTILIZ,N ,FOLL[+ AN
    ,AMALGAM,N """"""""""""""""""""" #CH
  ,LOSS ,UTILIZ,N ,FOLL[+ ! ,W9D+-
    UP (A #IJ@3P ,[N$ ,SUBSIDI>Y """ #DA
    ,NON-,CAPITAL ,LOSSES1
      ,RE/RICT$ ,F>M ,LOSSES1 ,F>M
      ,LOSSES & ,LIMIT$ ,"PN]%IP
      ,LOSSES """""""""""""""""""""" #DA
    ,ACQUISI;N ( ,3TROL """""""""""" #DE
    ,NET ,CAPITAL ,LOSSES """""""""" #DG
    ,ACQUISI;N ( ,3TROL """""""""""" #DH
                                     ;II
                 ,9DEX
    ,": ,P>5T ,=M$ ,AF
      ,SUBSIDI>Y'S ,LOSS ,YE> """""" #DI
,APP5DIX """"""""""""""""""""""""""" #EA
  ,EXAMPLE #A """""""""""""""""""""" #EA
  ,EXAMPLE #B """""""""""""""""""""" #EA
  ,EXAMPLE #C """""""""""""""""""""" #EB
  ,EXAMPLE #D """""""""""""""""""""" #EC
  ,EXAMPLE #E """""""""""""""""""""" #ED
  ,EXAMPLE #F """""""""""""""""""""" #ED
,EXPLAN,N ( ,*ANGES = ,9T]PRET,N
  ,BULLET9 ,,IT-#CJB;,R#C3 ,LOSSES
  (A ,CORPOR,N--,! ,E6ECT T
  ,ACQUISI;NS ( ,3TROL1
  ,AMALGAM,NS1 & ,W9D+S-UP H ON
  ,_! ,DEDUCTIBIL;Y--,AF ,JANU>Y
  #AE1 #AIHG """"""""""""""""""""""" #EF
  ,9TRODUC;N """"""""""""""""""""""" #EF
  ,OV]VIEW """"""""""""""""""""""""" #EF
  ,LEGISLATIVE & ,O!R ,*ANGES """""" #EG




                                    ;III

























,CANADA ,CU/OMS                       #A
& ,REV5UE ,AG5CY

              ,9COME ,TAX
          ,9T]PRET,N ,BULLET9
    
,SUBJECT3 ,9COME ,TAX ,ACT
  ,LOSSES (A ,CORPOR,N4 ,! ,E6ECT T
  ,ACQUISI;NS ( ,3TROL1 ,AMALGAM,NS1 &
  ,W9D+S-UP H ON ,_! ,DEDUCTIBIL;Y4 ,AF
  ,JANU>Y #AE1 #AIHG
,NUMB]3 ,,IT-#CJB;,R#C
,DATE3 ,FEBRU>Y #BH1 #AIID
,REF];E3 ,SUBSEC;NS #HG7#B.A71 #HH7#A.A7
  & 7#A.B71 #AAA7#D7 TO 7#E.E7 &
  #BDI7#D7 7AL SEC;N #AAJ.E1 SUBSEC;NS
  #AC7#BD71 #CA7#A71 #HG7#A71 #HH7#A.C71
  #IF7#B.A71 #AAA7#A7 & 7#C71 #ADI7#AJ7
  & #BEF7#G71 P>AGRAPHS #AB7#A77;I71
  #AC7#G77F71 #BJ7#A77B71 7L7 & 7P71
  #AAJ7#A77K71 #AAA7#H77A71 7B7 & 7B4#A7
  & #BEA7#E77B7 & ,"P ,,IV (! ,ACT &
  SUBSEC;N #AAJJ7#B.B7 (! ,REGUL,NS7

                                      #A
               ,APPLIC,N             A#A
    
  ,? BULLET9 APPLIES = AMALGAM,NS1
W9D+S-UP & ACQUISI;NS ( 3TROL O3URR+ AF
,JANU>Y #AE1 #AIHG1 O!R ?AN ACQUISI;NS (
3TROL O3URR+ AT A DATE 2F #AIHH ": !
P]SONS ACQUIR+ ! 3TROL 7 OBLIG$ ON
,JANU>Y #AE1 #AIHG 6ACQUIRE ! 3TROL "U !
T]MS (A WRITT5 AGREE;T 5T]$ 96ON OR 2F T
DATE4 ,= ACQUISI;NS ( 3TROL1 AMALGAM,NS
OR W9D+S-UP T O3URR$ 2F ,JANU>Y #AF1
#AIHG1 SEE ,,IT-#CJB;,R#B DAT$ ,MAY #BC1
#AIHF &! ,SPECIAL ,REL1SE 6T BULLET9
DAT$ ,FEBRU>Y #BH1 #AIID4

                ,SUMM>Y
    
  ,? BULLET9 4CUSSES ! E6ECT T AN
ACQUISI;N ( 3TROL HAS ON ! ABIL;Y (A
CORPOR,N 6UTILIZE V>I\S LOSSES T _H
A3RU$ OR BE5 R1LIZ$ 0! CORPOR,N UP 6!
PO9T (! ACQUISI;N ( 3TROL4 ,:5 3TROL (A
CORPOR,N HAS BE5 ACQUIR$1 ! CORPOR,N IS
DEEM$ 6H AN IMM TAX,N YE> 5D4 ,G5],Y1
LOSSES 9CURR$ 7OR A3RU$7 2F AN        #B
             ,,IT-#CJB;,R#C          B#A
ACQUISI;N ( 3TROL _C 2 DEDUCT$ = TAX,N
YE>S 5D+ AF ! ACQUISI;N ( 3TROL4
,SIMIL>LY1 LOSSES 9CURR$ AF AN ACQUISI;N
( 3TROL _C 2 C>RI$ BACK & DEDUCT$ 9 A
TAX,N YE> 5D+ 2F 3TROL 0 ACQUIR$4 ,H["E1
9 C]TA9 CIRCUM/.ES1 NON-CAPITAL LOSSES
OR F>M LOSSES 9CURR$ 2F AN ACQUISI;N (
3TROL MAY 2 DEDUCT$ 9 TAX,N YE>S 5D+ AF
! ACQUISI;N ( 3TROL & S* LOSSES 9CURR$
AF AN ACQUISI;N ( 3TROL MAY 2 DEDUCT$ 9
TAX,N YE>S 5D+ 2F AN
--------------------------------------#B
ACQUISI;N ( 3TROL4 ,! 3DI;NS "U : ^!
LOSSES MAY 2 DEDUCT$ >E 4CUSS$4 ,!
BULLET9 AL 4CUSSES ! FL[-"? ( LOSSES F
PR$ECESSOR CORPOR,NS 6! NEW CORPOR,N 9
AN AMALGAM,N & F A SUBSIDI>Y 6A P>5T 9 A
W9D+-UP4 ,! E6ECT ( AN ACQUISI;N ( 3TROL
ON ! LOSSES (A PR$ECESSOR CORPOR,N OR
SUBSIDI>Y CORPOR,N IS SIMIL> 6! RULES
4CUSS$ ABV4
  ,! EXAMPLES US$ 9 ? BULLET9 >E 9T5D$
6ILLU/RATE ! RELEVANT PROVI.NS REF]R$
6IN ! ,REF];E SEC;N ABV & D N         #C
             ,,IT-#CJB;,R#C          A#B
PRECLUDE ! APPLIC,N (! ,G5]AL ,ANTI-
,AVOID.E ,RULE 9 SEC;N #BDE4 ,REF];E %D
2 MADE 6,9=M,N ,CIRCUL> #HH-B DAT$
,OCTOB] #BA1 #AIHH & ANY SUPPLE;TS "!TO4
  ,! SUBJECT MATT] ( ? BULLET9 IS >RANG$
"U ! FOLL[+ H1D+S3

                               ,P>AGRAPH
,ACQUISI;N ( ,3TROL
  ,9TRODUC;N """""""""""""""""""""""" #A
  ,M1N+ ( ,3TROL (A ,CORPOR,N """"""" #B
  ,3TROL 0A ,GR\P ( ,P]SONS """"""""" #C
  ,ACT+ 9 ,3C]T """"""""""""""""""" #D-F
  ,ACQUISI;NS & ,4POSALS (A
    ,M9OR;Y ,9T]E/ """""""""""""""" #G-H
  ,": ,3TROL (A ,CORPOR,N IS
    ,DEEM$ ,N 6,H ,BE5 ,ACQUIR$ """"" #I
  ,ACQUISI;NS ( ,3TROL ,RELAT$
    6,*ANGES 9 ,EXECUTORS1
    ,TRU/EES1 ETC4 ( ,E/ATES """"""" #AJ
  ,TAX,N ,YE> ,5D ,2F ,ACQUISI;N
    ( ,3TROL """"""""""""""""""""""" #AA
  
                                      #D
             ,,IT-#CJB;,R#C          B#B
,RE/RIC;NS ON ,LOSS ,UTILIZ,N 0A
  ,CORPOR,N ,FOLL[+ AN ,ACQUISI;N
  ( ,3TROL
  ,NET ,CAPITAL ,LOSSES """""""""""" #AB
  ,NON-,CAPITAL ,LOSSES & ,F>M
    ,LOSSES--,/R1M+ ,RULES3 """"" #AC-AE
  ,A3RU$ ,LOSSES ON ,CAPITAL
    ,PROP]TY """""""""""""""""""" #AF-BJ
  ,A3RU$ ,T]M9AL ,LOSSES """"""""""" #BA
  ,A3RU$ ,LOSSES ,) ,RESPECT
    6,CUMULATIVE ,ELIGI# ,CAPITAL "" #BB
  ,RES]VES ,= ,D\BT;L ,A3.TS """"""" #BC
  ,*ANGE 9 ,TAX ,/ATUS """"""""""""" #BD
  ,A3RU$ ,LOSSES 9 ,9V5TORY """""""" #BE
  ,ANTI-AVOID.E ,RULES """"""""""""" #BF
,LOSS ,UTILIZ,N ,FOLL[+ AN
  ,AMALGAM,N """""""""""""""""""" #BG-BH
--------------------------------------#C
,LOSS ,UTILIZ,N ,FOLL[+ ! ,W9D+-
  UP (A #IJ@3P ,[N$ ,SUBSIDI>Y
  ,NON-,CAPITAL ,LOSSES1
    ,RE/RICT$ ,F>M ,LOSSES1 ,F>M
  
                                      #E
             ,,IT-#CJB;,R#C          A#C
    ,LOSSES & ,LIMIT$ ,"PN]%IP
    ,LOSSES """"""""""""""""""""" #BI-CJ
  ,ACQUISI;N ( ,3TROL """"""""""" #CA-CB
  ,NET ,CAPITAL ,LOSSES """""""""""" #CC
  ,ACQUISI;N ( ,3TROL """""""""""""" #CD
  ,": ,P>5T ,=M$ ,AF ,SUBSIDI>Y'S
    ,LOSS ,YE> """""""""""""""""" #CE-CF
,EXAMPLES """"""""""""""""""""" ,APP5DIX

          ,4CUS.N & ,9T]PRET,N
          ,ACQUISI;N ( ,3TROL
               ,9TRODUC;N
    
#A4 ,A CORPOR,N'S ABIL;Y 6DEDUCT
  PREVI\SLY UNUTILIZ$ LOSSES IS RE/RICT$
  :5 3TROL (! CORPOR,N HAS BE5 ACQUIR$
  0A P]SON OR GR\P ( P]SONS4 ,USU,Y1 X
  IS CLE> :5 AN ACQUISI;N ( 3TROL HAS
  TAK5 PLACE4 ,H["E1 "! >E SITU,NS :5 X
  IS N CLE>4 ,P>AGRAPHS #B 6#H 2L EXPLA9
  ! 3CEPT ( .3TROL & .ACQUISI;NS .(
  .3TROL & EXAMPLES >E PROVID$ 9 !
  APP5DIX4
                                      #F
      ,M1N+ ( ,3TROL (A ,CORPOR,N    B#C
    
#B4 ,! ^W 3TROL IS N DEF9$ 9 ! ,ACT4 ,9
  ,,MNR V4 ,DWORK9 ,FURS 7,PEMBROKE7
  ,LTD41 #FG ,,DTC #EJCE4 7#AIFG7 ,,CTC
  #EJ1 ! ,SUPREME ,C\RT ( ,CANADA ADOPT$
  ! DEF9I;N ( 3TROL SET \ 0! ,EX*EQU]
  ,C\RT 9 ,BUCK]FIELD'S ,LTD4 V4 ,,MNR1
  #FD ,,DTC #ECJA1 7#AIFD7 ,,CTC #EJD4
  ,9 ,BUCK]FIELD'S1 ! ,EX*EQU] ,C\RT
  /AT$ T ! ^W 3TROL 3TEMPLATES ! "R (
  3TROL T RE/S 9 [N]%IP ( S* A NUMB] (
  %>ES Z C>RIES ) X ! "R 6A MAJOR;Y (!
  VOTES 9 ! ELEC;N (! BO>D ( DIRECTORS4
  ,9 ,V9EL& ,QU>RIES & ,CRU%$ ,/"O ,LTD4
  V4 ,,MNR1 #FF ,,DTC #EJIB1 7#AIFF7
  ,,CTC #FI1 X 0 E/ABLI%$ T ": A P]SON
  3TROLS "O CORPOR,N1 T P]SON IS 3SID]$
  63TROL ANY CORPOR,N T IS 3TROLL$ 0! F/
  CORPOR,N 79DIRECT 3TROL74




                                      #G
       ,3TROL 0A ,GR\P ( ,P]SONS     C#C
    
#C4 ,! NO;N ( GR\P 3TROL HAS DI6]5T
  M1N+S 9 DI6]5T >1S (! ,ACT4 ,=!
  PURPOSE (! ASSOCIAT$ CORPOR,N RULES 9
  SEC;N #BEF1 A GR\P ( P]SONS IS
  9T]PRET$ 9 XS BROADE/ S5SE 9 T X IS
  SIMPLY TWO OR M P]SONS :O [N %>ES 9 !
  SAME CORPOR,N 7P>AGRAPH
  #BEF7#A.B77A774 ,! M1N+ ( GR\P (
  P]SONS IS M LIMIT$ 9 ! 3TEXT (!
  ACQUISI;N ( 3TROL RULES 4CUSS$ 9 ?
  BULLET94 ,A GR\P ( P]SONS :O [N !
  MAJOR;Y (! VOT+ %>ES (A CORPOR,N W 2
  3SID]$ Z HAV+ COLLECTIVELY ACQUIR$
  3TROL (!
--------------------------------------#D
  CORPOR,N ": "! IS AN AGREE;T AM;G/ !M
  6VOTE _! %>ES JO9TLY1 :5 "! IS EVID;E
  T !Y ACT 9 3C]T 63TROL ! CORPOR,N1 OR
  :5 "! IS EVID;E ( _! 9T5;N 6ACT 9 3C]T
  63TROL ! CORPOR,N 7SEE #D-F 2L74 ,:5
  D1L+ ) GR\PS X IS ALW A "Q ( FACT Z
  6:E!R ANY GR\P ( P]SONS :O [N !
  MAJOR;Y (! VOT+ P[] 9 A CORPOR,N    #H
             ,,IT-#CJB;,R#C          A#D
  IS 9 3TROL (! CORPOR,N4 ,H["E1 ": A
  CORPOR,N IS 3TROLL$ 0A S+LE P]SON1 ?
  PRECLUDES A GR\P F AL 3TROLL+ !
  CORPOR,N 7,S\?SIDE ,C> ,M>KET ,LTD4 V4
  ,! ,QUE51 #HB ,,DTC #FAGI1 7#AIHB7
  ,,CTC #BAD 7,,FCTD774

             ,ACT+ 9 ,3C]T
    
#D4 ,A GR\P ( P]SONS CD 2 REG>D$ Z ACT+
  9 3C]T :5 ! GR\P ACTS ) 3SID]A#
  9T]DEP5D;E 9 TRANSAC;NS 9VOLV+ A -MON
  PURPOSE4 ,A PREDET]M9$ AGREE;T : SETS
  \ H[ ! GR\P IS 6ACT 9 C]TA9 SITU,NS WD
  NORM,Y 3/ITUTE ACT+ 9 3C]T4 ,9 WIDELY
  HELD CORPOR,NS1 ! FACT T A MAJOR;Y (
  %>EHOLD]S VOTE COLLECTIVELY 6TAKE "S
  AC;N DOES N 0XF 9DICATE T ! GR\P (
  %>EHOLD]S IS ACT+ 9 3C]T4 ,H["E1 9
  CLOSELY HELD CORPOR,NS ! FACT T
  %>EHOLD]S JO9TLY ADOPT SPECIFIC MUTU,Y
  ADVANTAGE\S M1SURES IS AN IMPORTANT
  9DICATOR ( AC;NS 9 3C]T4
                                      #I
             ,,IT-#CJB;,R#C          B#D
#E4 ,9 ,V9A ,RUG 7,CANADA7 ,LTD4 V4
  ,,MNR1 #FH ,,DTC #EJBA1 7#AIFH7 ,,CTC
  #A 7,,SCC71 "S P]SONS 9 A GR\P (
  P]SONS 7 RELAT$ & O!RS _H BE5 BUSI;S
  ASSOCIATES = _M YE>S4 ,? REPRES5T$ A
  -MON L9K : 0 SU6ICI5T 65A# !M 6EX]CISE
  3TROL4 ,SIMIL>LY1 9 ,EXPRESS ,CA#
  ,T4,V4 V4 ,,MNR #HB ,,DTC #ADCA1
  7#AIHB7 ,,CTC #BDDG1 ! ,TAX ,REVIEW
  ,BO>D /AT$ T ! EXI/;E ( VOT+ TRU/S1
  -MUN;Y ( 9T]E/ & O!R -MON L9KS 2T
  %>EHOLD]S 7 IMPORTANT 9 DET]M9+ : GR\P
  3TROLL$ TWO CORPOR,NS4
#F4 ,! PURPOSE ( SEEK+ A L9K OR -MON
  9T]E/ )9 A GR\P ( P]SONS IS 65SURE T !
  ACQUISI;N ( 3TROL 0A GIV5 GR\P (
  P]SONS IS N =TUIT\S OR CO9CID5TAL1 B !
  \TCOME ( AN AC;N OR AN EV5T ORGANIZ$
  0! GR\P4 ,SEEK+ A TAX ADVANTAGE >IS+ F
  ! A3UMULAT$ LOSSES (A CORPOR,N MAY
  WELL PROVIDE A L9K OR A -MON 9T]E/
  AM;G ! MEMB]S (A GIV5 GR\P4 ,=A FUR!R

                                     #AJ
             ,,IT-#CJB;,R#C          C#D
  4CUS.N ( ACT+ 9 3C]T SEE ! CURR5T V].N
  ( ,,IT-#DAI1 ,M1N+ ( ,>M'S ,L5G?4
--------------------------------------#E
       ,ACQUISI;NS & ,4POSALS (A
             ,M9OR;Y ,9T]E/
    
#G4 ,A P]SON MAY ACQUIRE A M9OR;Y 9T]E/
  9 A LOSS CORPOR,N 0PUR*AS+ %>ES F "O
  OR M %>EHOLD]S (! CORPOR,N &1 USU,Y1
  AN ACQUISI;N ( 3TROL W N O3UR4 ,H["E1
  9 CASES 9VOLV+ ! ACQUISI;N (A M9OR;Y
  9T]E/1 ALL ! CIRCUM/.ES M/ 2 EXAM9$4
  ,= EXAMPLE1 ! TYPE ( CORPOR,N
  7PRIVATE1 PUBLIC1 CLOSELY HELD71 :O
  PREVI\SLY 3TROLL$ ! CORPOR,N1 ! NUMB]
  OR P]C5TAGE ( %>ES ACQUIR$1 ! ME?OD (
  ACQUISI;N 7PUR*ASE ( EXI/+ %>ES1
  TRANSF] ^U D1?1 ! ISSU+ ( TR1SURY
  %>ES1 PUR*ASE PURSUANT 6A PUR*ASE/SALE
  AGREE;T1 ETC471 -MUNITIES ( 9T]E/1
  AC;NS 9 3C]T & S ON WD 2 EXAM9$
  6DET]M9E :E!R 3TROL HAS BE5 ACQUIR$4
  ,:5 %>ES >E ACQUIR$1 EV5 0A M9OR;Y
  %>EHOLD]1 FOLL[+ NEGOTI,NS         #AA
             ,,IT-#CJB;,R#C          A#E
  9VOLV+ ! 3TROLL+ %>EHOLD] OR
  %>EHOLD]S1 X MAY "S"TS 2 9 ORD]
  6PRESUME T A GR\P OR A NEW GR\P HAS
  ACQUIR$ 3TROL (! CORPOR,N4 ,= EXAMPLE1
  9 ! CASE (A SMALL1 PRIVATE CORPOR,N )
  SUB/ANTIAL LOSSES1 X WD 2 UNUSUAL =A
  P]SON 6ACQUIRE A M9OR;Y 9T]E/ )\T
  OBTA9+ C]TA9 GU>ANTEES F ! MAJOR;Y
  %>EHOLD]S & )\T ACT+ PURSUANT 6A
  PRE>RANG$ PLAN 7: SU7E/S A -MON 9T]E/
  & AC;N 9 3C]T74 ,X IS "!=E NATURAL
  6ASSUME T ! >RIVAL ( ? NEW %>EHOLD] W
  TRI7] AN ACQUISI;N ( 3TROL 0A NEW GR\P
  ( : HE OR %E IS "P4

  ,SIMIL>LY1 9 ! CASE ( PUBLIC CORPOR,NS
  OR :5 ! GR\P ( %>EHOLD]S IS L>GE1 X
  MAY 2 9 ORD] 6PRESUME T 3TROL HAS N
  BE5 ACQUIR$ UN.S ! NEW %>EHOLD] &! =M]
  3TROLL+ GR\P CLE>LY ACT 9 3C]T4
#H4 ,! SAME SITU,N PREVAILS :5 S"EAL
  %>EHOLD]S ACT 9 3C]T 63TROL A CORPOR,N
  & "O ( !M SELLS 8 OR H] %>ES 6! O!RS4
  ,H["E1 2F 3CLUD+ T A GR\P ACT$ 9   #AB
             ,,IT-#CJB;,R#C          B#E
  3C]T & T 3TROL HAS BE5 ACQUIR$ 0! NEW
  SMALL] GR\P1 ALL ! CIRCUM/.ES W 2
  EXAM9$1 9CLUD+ ! NUMB] &! P]C5TAGE (
  %>ES TRAD$4 ,! OBJECTIVE (! ACQUISI;N
  ( 3TROL RULES IS 6LIMIT ! TRANSF] (
  LOSSES 9 AN ACQUISI;N ( 3TROL SITU,N4
  ,:5 ! GR\P ( %>EHOLD]S DIM9I%ES &
  9CLUDES ONLY MEMB]S ( AN 9ITI,Y L>G]
  GR\P1 "! G5],Y %D 2 NO ACQUISI;N (
  3TROL =! PURPOSES (! RULES GOV]N+
  TRANSF] ( LOSSES4

   ,": ,3TROL (A ,CORPOR,N IS ,DEEM$
          ,N 6,H ,BE5 ,ACQUIR$
    
#I4 ,0VIRTUE ( P>AGRAPH #BEF7#G77A71 A
  P]SON 7OR P]SONS7 % 2 DEEM$ N 6H
  ACQUIR$ 3TROL (A "PICUL> CORPOR,N
  79CLUD+ AF
--------------------------------------#F
  #AIHI1 ANY CORPOR,N 3TROLL$ 0! "PICUL>
  CORPOR,N7 0R1SON (! ACQUISI;N ( %>ES
  7OR AF #AIHI1 ! REDEMP;N OR C.ELL,N (
                                     #AC
             ,,IT-#CJB;,R#C          A#F
  %>ES (! "PICUL> CORPOR,N--SEE 2L71 IF
  T P]SON 7OR P]SONS73
  7A7 WAS1 IMMLY 2F ! %>E REDEMP;N1
    ACQUISI;N1 OR C.ELL,N1 RELAT$ 6!
    "PICUL> CORPOR,N O!RWISE ?AN 0R1SON
    (A "R REF]R$ 6IN P>AGRAPH
    #BEA7#E77B71
  7B7 0 AN EXECUTOR1 ADM9I/RATOR OR
    TRU/EE ( AN E/ATE :O ACQUIR$ ! %>ES
    0VIRTUE (! D1? ( ANY O!R P]SON1
  7C7 0 RELAT$ 6A DEC1S$ P]SON & ACQUIR$
    ! %>ES 0WAY (A 4TRIBU;N F AN E/ATE
    >IS+ ON ! D1? ( T P]SON1 OR
  7D7 0 A CORPOR,N >IS+ F ! AMALGAM,N (
    TWO OR M PR$ECESSOR CORPOR,NS EA* (
    : WAS1 IMMLY 2F ! AMALGAM,N1 RELAT$
    7O!RWISE ?AN 0VIRTUE (A "R REF]R$
    6IN P>AGRAPH #BEA7#E77B77 6! "PICUL>
    CORPOR,N4
  
  ,Z 4CUSS$ ABV1 ! PROVI.NS ( P>AGRAPH
  #BEF7#G77A7 CD APPLY :5 "! IS AN
  ACQUISI;N ( 3TROL (A "PICUL> CORPOR,N
  0R1SON (! REDEMP;N OR C.ELL,N (    #AD
             ,,IT-#CJB;,R#C          B#F
  XS %>ES4 ,? G5],Y APPLIES 6REDEMP;NS
  OR C.ELL,NS O3URR+ AF #AIHI1 H["E1 IF
  A P]SON HAS ELECT$ 0NOTIFY+ ! ,M9I/] 9
  WRIT+ ON OR 2F ,DECEMB] #AJ1 #AIIC1 X
  WD APPLY 6REDEMP;NS OR C.ELL,NS AF
  ,JULY #AC1 #AIIJ1 9 RESPECT ( T P]SON4

  ,3SID] ! FOLL[+ EXAMPLE3

  ,MR4 ;,B #EJ@3P ,,OPCO ,MR4 ;,A #EJ@3P

  ,MR4 ;,A & ,MR4 ;,B >E BRO!RS & EA*
  [NS #EJ@3P (! VOT+ %>ES ( ,OPCO4 ,OPCO
  !N REDEEMS ,MR4 ;,B'S %>ES4 ,S9CE ,MR4
  ;,A N[ 3TROLS ,OPCO 0HMF1 HE HAS
  ACQUIR$ 3TROL (! CORPOR,N4 ,IF !
  REDEMP;N ( ,MR4 ;,B'S %>ES O3URS 2F
  #AIIJ1 P>AGRAPH #BEF7#G77A7 W N APPLY
  6DEEM ,MR4 ;,A N 6H ACQUIR$ 3TROL (
  ,OPCO 2C ,MR4 ;,A HAS N ACQUIR$ ANY
  A4I;NAL %>ES 9 ! CORPOR,N4 ,IF !
  REDEMP;N O3URS AF #AIHI1 SUBP>AGRAPH
  #BEF7#G77A77;I7 W APPLY 6DEEM 3TROL (
  ,OPCO N 6H BE5 ACQUIR$4 ,? IS 2C   #AE
             ,,IT-#CJB;,R#C          C#F
  ,MR4 ;,A HAS ACQUIR$ 3TROL ( ,OPCO
  0R1SON (! REDEMP;N ( %>ES & IMMLY 2F !
  %>E REDEMP;N ,MR4 ;,A 0 RELAT$ 6,OPCO
  0VIRTUE ( SUBP>AGRAPH
  #BEA7#B77B77;II74
--------------------------------------#G
  ,! E6ECT ON 3TROL ( "S *ANGES 9 !
  %>EHOLD+S )9 CORPORATE GR\PS IS
  ILLU/RAT$ 0S"EAL EXAMPLES 9 ! APP5DIX4

,NOTE3
  ,DRAFT LEGISL,N 3TA9$ 9 ! ,AM5D;TS 6!
  ,9COME ,TAX ,ACT & ,RELAT$ ,/ATUTES
  REL1S$ 0! ,M9I/] ( ,F9.E ON ,AUGU/
  #CJ1 #AIIC1 PROPOSES 6AM5D P>AGRAPH
  #BEF7#G77A74 ,PROPOS$ SUBP>AGRAPH
  #BEF7#G77A77;I7 PROVIDES T1 9 C]TA9
  CIRCUM/.ES1 ! ACQUISI;N (A "PICUL>
  CORPOR,N'S %>ES W N1 0XF1 RESULT 9 AN
  ACQUISI;N ( 3TROL ( T OR ANY O!R
  CORPOR,N4 ,^? CIRCUM/.ES 9CLUDE !
  ACQUISI;N ( %>ES 0ANY P]SON F A RELAT$
  P]SON1 ! ACQUISI;N ( %>ES1 F ANY
  P]SON1 0A P]SON RELAT$ 6!          #AF
             ,,IT-#CJB;,R#C          A#G
  "PICUL> CORPOR,N1 ! ACQUISI;N ( %>ES
  0AN E/ATE &! ACQUISI;N ( %>ES 0ANY
  P]SON F ! E/ATE (A RELAT$ P]SON4
  ,PROPOS$ SUBP>AGRAPH #BEF7#G77A77;II7
  PROVIDES T 3TROL (A "PICUL> CORPOR,N W
  N 2 3SID]$ 6H BE5 ACQUIR$ 2C (!
  REDEMP;N OR C.ELL,N ( %>ES ( T
  CORPOR,N OR ANO!R CORPOR,N 3TROLL+ X1
  PROVID$ ! CORPOR,N IS 3TROLL$1 AF !
  REDEMP;N OR C.ELL,N1 0A P]SON OR GR\P
  RELAT$ 6! CORPOR,N 2F T EV5T4 ,IF
  5ACT$ Z PROPOS$1 ^! AM5D;TS W APPLY
  6ACQUISI;NS1 REDEMP;NS & C.ELL,NS
  O3URR+ AF #AIIB4

      ,ACQUISI;NS ( ,3TROL ,RELAT$
         6,*ANGES 9 ,EXECUTORS1
       ,TRU/EES1 ,ETC4 ( ,E/ATES
    
#AJ4 ,": AN EXECUTOR1 ADM9I/RATOR OR
  TRU/EE ( AN E/ATE 3TROLS A CORPOR,N1 X
  IS A "Q ( FACT Z 6:E!R "! IS AN
  ACQUISI;N ( 3TROL (! CORPOR,N :5 "! IS
  A *ANGE (! EXECUTOR1 ADM9I/RATOR   #AG
             ,,IT-#CJB;,R#C          B#G
  OR TRU/EE4 ,= PURPOSES ( P>AGRAPH
  #BEF7#G77A71 ": ! EXECUTOR1
  ADM9I/RATOR OR TRU/EE IS REPLAC$ Z A
  RESULT ( T P]SON'S D1? OR 9ABIL;Y
  6FULFIL 8 OR H] FUNC;NS1 ! 3TROL (!
  CORPOR,N W 2 REG>D$ Z REMA9+ UN*ANG$4
  ,H["E1 A *ANGE 9 EXECUTOR1 ADM9I/RATOR
  OR TRU/EE TGR )A SUB/ANTIAL *ANGE 9 !
  [N]%IP (! B5EFICIAL 9T]E/ 9 ! E/ATE W
  2 3SID]$ AN ACQUISI;N ( 3TROL (!
  CORPOR,N4

          ,TAX,N ,YE> ,5D ,2F
          ,ACQUISI;N ( ,3TROL
    
#AA4 ,G5],Y1 ! RULES 9 SUBSEC;N #BDI7#D7
  APPLY ": 3TROL (A CORPOR,N IS ACQUIR$
  0A P]SON OR A GR\P ( P]SONS4 ,H["E1 ^!
  RULES D N APPLY IF ! CORPOR,N IS A
  =EIGN A6ILIATE T DOES N C>RY ON BUSI;S
  9 ,CANADA & 3TROL 0 ACQUIR$ AF ,JULY
  #AC1 #AIIJ4

                                     #AH
             ,,IT-#CJB;,R#C           #H
  ,SUBSEC;N #BDI7#D7 PROVIDES T ! TAX,N
  YE> (! CORPOR,N IS DEEM$ 65D IMMLY 2F
  ! "T T 3TROL IS ACQUIR$ &A NEW TAX,N
  YE> IS DEEM$ 62G9 AT T "T4 ,? W GIVE
  RISE 6! NORMAL 3SEQU;ES (A TAX,N YE>-
  5D 9CLUD+ ! FIL+ (! CORPOR,N'S TAX
  RETURN & PAY;T ( TAXES DUE4 ,/>T+ )!
  NEW TAX,N YE>1 ! CORPOR,N MAY ADOPT A
  NEW FISCAL P]IOD )\T SEEK+ ! 3CURR;E
  (! ,M9I/]4 ,": ! ACQUISI;N ( 3TROL
  O3URS N M ?AN #G "DS AF ! 5D (!
  CORPOR,N'S IMMLY PREC$+ TAX,N YE>1
  H["E1 & T TAX,N YE> DID N 5D Z A
  3SEQU;E (! ACQUISI;N ( 3TROL (!
  CORPOR,N OR (! EMIGR,N1 BANKRUPTCY OR
  *ANGE 9 ! TAX-EXEMPT /ATUS (!
  CORPOR,N1 ! CORPOR,N MAY ELECT 9 XS
  TAX RETURN = T YE> 6EXT5D T PREC$+
  TAX,N YE> 65D IMMLY 2F ! ACQUISI;N (
  3TROL4



                                     #AI
          ,RE/RIC;NS ON ,LOSS        A#H
     ,UTILIZ,N 0A ,CORPOR,N ,FOLL[+
         AN ,ACQUISI;N ( ,3TROL
         ,NET ,CAPITAL ,LOSSES
    
#AB4 ,": 3TROL (A CORPOR,N IS ACQUIR$ 0A
  P]SON OR GR\P ( P]SONS1 ! CORPOR,N'S
  NET CAPITAL LOSSES = TAX,N YE>S 5D+ 2F
  3TROL 0 ACQUIR$ _C1 0VIRTUE ( P>AGRAPH
  #AAA7#D77A71 2 C>RI$ =W>D "U P>AGRAPH
  #AAA7#A77B7 6ANY TAX,N YE> 5D+ AF
  3TROL 0 ACQUIR$4 ,SIMIL>LY1 A
  CORPOR,N'S NET CAPITAL LOSSES 9CURR$ 9
  A TAX,N YE> 5D+ AF 3TROL 0 ACQUIR$1 _C
  0VIRTUE ( P>AGRAPH #AAA7#D77B7 2 C>RI$
  BACK "U P>AGRAPH #AAA7#A77B7 6A TAX,N
  YE> 5D+ 2F 3TROL 0 ACQUIR$4

      ,NON-,CAPITAL ,LOSSES & ,F>M
         ,LOSSES--,/R1M+ ,RULES
    
#AC4 ,": 3TROL (A CORPOR,N IS ACQUIR$ 0A
  P]SON OR GR\P ( P]SONS1 ! G5]AL RULE 9
  SUBSEC;N #AAA7#E7 IS T .NO .AM.T 9
  RESPECT (! CORPOR,N'S NON-         #BJ
             ,,IT-#CJB;,R#C          B#H
  CAPITAL LOSS OR F>M LOSS =A TAX,N YE>
  5D+ 2F ! ACQUISI;N ( 3TROL IS DEDUCTI#
  =A TAX,N YE> 5D+ AF ! ACQUISI;N (
  3TROL4

  ,NON-CAPITAL LOSSES & F>M LOSSES C NO
  L;G] 2 C>RI$ =W>D = DEDUC;N AG/ TAXA#
  CAPITAL GA9S : >ISE AF AN ACQUISI;N (
  3TROL4 ,H["E1 P>AGRAPH #AAA7#E77A7
  P]MITS A CORPOR,N1 9 -PUT+ XS TAXA#
  9COME =A "PICUL> TAX,N YE> 5D+ AF AN
  ACQUISI;N ( 3TROL1 6DEDUCT A NON-
  CAPITAL LOSS OR F>M LOSS 9CURR$ 2F !
  ACQUISI;N ( 3TROL IF !
--------------------------------------#I
  "PICUL> BUSI;S : GAVE RISE 6! LOSS 78T
  BUSI;S01 SEE #AD 2L7 IS C>RI$ ON 0!
  CORPOR,N = PR(IT OR )A R1SONA#
  EXPECT,N ( PR(IT "?\T ! "PICUL> YE>4
  ,! AM.T T MAY 2 DEDUCT$ IS ! LESS] (3
  7A7 ! A7REGATE (
    7;I7 T POR;N ( XS NON-CAPITAL LOSS
      OR F>M LOSS =A TAX,N YE> 5D+ 2F !
      ACQUISI;N ( 3TROL T 0 9CURR$   #BA
             ,,IT-#CJB;,R#C          A#I
      9 C>RY+ ON A BUSI;S 7LOSSES
      ATTRIBUT$ 6PROP]TY & ALL[A# BUSI;S
      9VE/;T LOSSES EXPIRE71 &
    7;II7 ": ! LOSS 0 9CURR$ AF ! #AIHG
      TAX,N YE> &! BUSI;S 0 C>RI$ ON 9 T
      YE>1 T POR;N (! LOSS T REPRES5TS !
      AM.T T WD O!RWISE H BE5 DEDUCTI# 9
      -PUT+ ! CORPOR,N'S TAXA# 9COME =!
      LOSS YE> "U P>AGRAPH #AAJ7#A77K71
      &
  7B7 ! A7REGATE (! CORPOR,N'S 9COME =!
    "PICUL> YE> F T BUSI;S & ":
    PROP]TIES 7 SOLD1 L1S$1 R5T$ OR
    DEVELOP$ OR S]VICES R5D]$ 9 ! C\RSE
    ( C>RY+ ON T BUSI;S 2F T "T1 F ANY
    O!R BUSI;S SUB/ANTI,Y ALL ! 9COME (
    : 0 DERIV$ F ! SALE1 L1S+1 R5TAL OR
    DEVELOP;T1 Z ! CASE MAY BE1 ( SIMIL>
    PROP]TIES OR ! R5D]+ ( SIMIL>
    S]VICES 7SEE #AD 2L =A 4CUS.N (
    8SIMIL>074
  
  ,P>AGRAPH #AAA7#E77B7 PROVIDES SIMIL>
  RE/RIC;NS =! C>RYBACK 6PRE-        #BB
             ,,IT-#CJB;,R#C          B#I
  ACQUISI;N YE>S ( NON-CAPITAL LOSSES &
  F>M LOSSES 9CURR$ 9 PO/-ACQUISI;N
  YE>S4
#AD4 ,Z NOT$ 9 #AC ABV1 NON-CAPITAL
  LOSSES & F>M LOSSES MAY N 2 C>RI$ =W>D
  6A PO/-ACQUISI;N ( 3TROL YE>1 IF !
  LOSS CORPOR,N 0 N1 "?\T T PO/-
  ACQUISI;N YE>1 C>RY+ ON 8T BUSI;S04
  ,:E!R ! CORPOR,N C>RI$ ON 8T BUSI;S0
  IS A "Q ( FACT4 ,FACTORS 6BE 3SID]$ 9
  DET]M9+ :E!R 8T BUSI;S0 0 2+ C>RI$ ON
  9CLUDE ! FOLL[+3
  7A7 LOC,N (! BUSI;S C>RI$ ON 2F & AF !
    ACQUISI;N ( 3TROL1
  7B7 NATURE (! BUSI;S1
  7C7 "N (! BUSI;S1
  7D7 NATURE ( 9COME-PRODUC+ ASSETS1
  7E7 EXI/;E (A P]IOD OR P]IODS (
    DORMANCY1
-------------------------------------#AJ
  7F7 EXT5T 6: ! ORIG9AL BUSI;S 3/ITUT$
    A SUB/ANTIAL POR;N (! ACTIVITIES (!
    CORPOR,N 9 ! ALLOC,N ( "T & F9ANCIAL
    RES\RCES4                        #BC
             ,,IT-#CJB;,R#C         A#AJ
  ,! ^W SIMIL> 9 ! 3TEXT ( SUBSEC;N
  #AAA7#E7 IS G5],Y 9T]PRET$ Z 8(! SAME
  G5]AL NATURE OR "*04 ,H["E1 A DET]M9,N
  (! SIMIL>;Y ( PROP]TIES SOLD1 L1S$1
  R5T$ OR DEVELOP$ & S]VICES R5D]$ 9 TWO
  OR M DI6]5T BUSI;SES =! PURPOSES (
  P>AGRAPH #AAA7#E77A7 OR 7B7 IS
  PRIM>ILY A "Q ( FACT T C ONLY 2
  DET]M9$ HAV+ REG>D 6ALL ! RELEVANT
  FACTS & CIRCUM/.ES 9 EA* CASE4 ,=
  A4I;NAL -;TS ON DET]M9+ :E!R A
  CORPOR,N 0 C>RY+ ON ! SAME BUSI;S
  7I4E41 8T BUSI;S071 SEE ! CURR5T V].N
  ( ,,IT-#BJF1 ,SEP>ATE ,BUSI;SES4
#AE4 ,6ILLU/RATE ! APPLIC,N ( P>AGRAPH
  #AAA7#E77A71 3SID] ! FOLL[+ EXAMPLE3
  ,CORPOR,N ;,B1 A MANUFACTUR] (
  ELECTRICAL APPLI.ES1 HAS A ,DECEMB]
  #CA TAX,N YE> 5D & HAS A3UMULAT$ NON-
  CAPITAL LOSSES ( 4#AJJ1JJJ 6,DECEMB]
  #CA1 #AI-C4 ,CORPOR,N ;,B SU/A9S
  LOSSES ( 4#BJ1JJJ F BUSI;S OP],NS =!
  SIX MON?S 5D$ ,JUNE #CJ1 #AI-D4 ,ON
                                     #BD
             ,,IT-#CJB;,R#C         B#AJ
  ,JULY #A1 #AI-D ,CORPOR,N ;,A ACQUIRES
  3TROL ( ,CORPOR,N ,B4

,SITU,N ;,X
  ,CORPOR,N ;,A IS A SU3ESS;L & PR(ITA#
  MANUFACTUR] ( ELECTRICAL APPLI.ES &
  CAUSES ,CORPOR,N ;,B 63T9UE !
  MANUFACTURE ( XS ELECTRICAL APPLI.ES
  "U ! E6ICI5T & DYNAMIC MANAGE;T (
  ,CORPOR,N ;,A4 ,CORPOR,N ;,B R1LIZES A
  PR(IT ( 4#CE1JJJ =! LA/ SIX MON?S (
  #AI-D4 ,NO "P ( ,CORPOR,N ;,B'S BUSI;S
  IS 4CONT9U$ 9 ! #AI-D & SUBSEQU5T
  TAX,N YE>S4

,SITU,N ;,Y
  ,CORPOR,N ;,A IS AL A MANUFACTUR] (
  ELECTRICAL APPLI.ES & ON ,JULY #A1
  #AI-D CAUSES ,CORPOR,N ;,B 6-M;E !
  MANUFACTURE & SALE ( ,CORPOR,N ,A'S
  PR(ITA# L9E ( ELECTRICAL APPLI.ES 9
  A4I;N 6XS [N L9E4 ,CORPOR,N ;,B MAKES
  A PR(IT ( 4#BE1JJJ =! LA/ SIX MON?S (
                                     #BE
             ,,IT-#CJB;,R#C         C#AJ
  #AI-D & 3T9UES T SAME BUSI;S "?\T XS
  #AI-E & SUBSEQU5T TAX,N YE>S4

,SITU,N ;,Z
  ,CORPOR,N ;,A IS A MANUFACTUR] ( :EEL$
  GDS 7TRICYCLES1 BICYCLES1 WAGONS1 BABY
  C>RIAGES1 ETC47 & 9 #AI-D CAUSES
  ,CORPOR,N ;,B 64CONT9UE ! MANUFACTURE
  ( ELECTRICAL APPLI.ES1 6RETOOL & 6-M;E
  ! MANUFACTURE ( BABY C>RIAGES4
  ,CORPOR,N ;,B MAKES A PR(IT ( 4#BE1JJJ
  9 #AI-D F ! SALE ( BABY C>RIAGES4

  ,9 EA* (! ?REE SITU,NS ,CORPOR,N ;,B W
  H A3UMULAT$ A NON-CAPITAL LOSS (
  4#ABJ1JJJ 9
-------------------------------------#AA
  RESPECT ( TAX,N YE>S 5D+ 2F XS 3TROL 0
  ACQUIR$ ON ,JULY #A1 #AI-D4 ,9 SITU,N
  ;,X1 ! 9COME ( ,CORPOR,N ;,B = XS
  TAX,N YE>S 5D+ AF 3TROL 0 ACQUIR$ ON
  ,JULY #A1 #AI-D 0 DERIV$ F A BUSI;S
  C>RI$ ON = PR(IT : 0 ! SAME BUSI;S :
  GAVE RISE 6! NON-CAPITAL LOSSES    #BF
             ,,IT-#CJB;,R#C         A#AA
  ( 4#ABJ1JJJ A3UMULAT$ AT ,JUNE #CJ1
  #AI-D4 ,9 SITU,N ;,Y1 ! 9COME (
  ,CORPOR,N ;,B = ^? SAME TAX,N YE>S 0
  DERIV$ F A BUSI;S C>RI$ ON = PR(IT1 ?
  BUSI;S 0 -PRIS$ (! SAME BUSI;S : 0
  C>RI$ ON 2F ! "T AT : 3TROL *ANG$ &
  ANO!R BUSI;S : DERIV$ ALL XS 9COME F !
  SALE ( PROP]TIES SIMIL> 6^? SOLD 0!
  SAME BUSI;S4 ,ACLY1 P>AGRAPH
  #AAA7#E77A7 APPLIES 9 EI SITU,N ;,X OR
  ;,Y 6P]MIT ! APPLIC,N1 )9 ! LIMITS
  O!RWISE PROVID$ 9 SUBSEC;N #AAA7#A71 (
  ,CORPOR,N ;,B'S NON-CAPITAL LOSSES (
  4#ABJ1JJJ 6! EXT5T (! PR(IT1 IF ANY1
  R1LIZ$ 0X 9 A TAX,N YE> 5D+ AF ,JULY
  #A1 #AI-D4 ,9 SITU,N ;,Z1 ! BUSI;S :
  GAVE RISE 6,CORPOR,N ;,B'S LOSSES 0
  4CONT9U$4 ,ACLY1 NO "P ( ,CORPOR,N
  ;,B'S 4#ABJ1JJJ ( NON-CAPITAL LOSSES
  MAY 2 DEDUCT$ 9 ANY TAX,N YE> 5D+ AF
  ,JULY #A1 #AI-D4


                                     #BG
       ,A3RU$ ,LOSSES ON ,CAPITAL   B#AA
                ,PROP]TY
    
#AF4 ,": ! ADJU/$ CO/ BASE ( NON-
  DEPRECIA# CAPITAL PROP]TY (A CORPOR,N
  EXCE$S ! FAIR M>KET VALUE ( S* PROP]TY
  IMMLY 2F ! "T T 3TROL (! CORPOR,N IS
  ACQUIR$1 S* EXCESS IS REQUIR$ 6BE
  DEDUCT$ F ! ADJU/$ CO/ BASE ( T
  PROP]TY 0VIRTUE ( P>AGRAPH
  #AAA7#D77C74 ,! EXCESS IS DEEM$ 6BE A
  CAPITAL LOSS (! CORPOR,N 0VIRTUE (
  P>AGRAPH #AAA7#D77D7 = XS TAX,N YE>
  DEEM$ 65D IMMLY 2F ! ACQUISI;N (
  3TROL4
#AG4 ,P>AGRAPH #AAA7#D77E7 ALL[S !
  CORPOR,N1 IMMLY 2F ! ACQUISI;N (
  3TROL1 6DESIGNATE A DEEM$ 4POSI;N (
  ANY O!R CAPITAL PROP]TY1 9CLUD+ A
  DEPRECIA# PROP]TY 7O!R ?AN "O 6:
  P>AGRAPH #AAA7#D77C71 SEE #AF ABV1 OR
  SUBSEC;N #AAA7#E.A71 SEE #BA 2L1 WD
  APPLY74 ,? DESIGN,N CD1 = EXAMPLE1 2
  MADE 6G5]ATE A CAPITAL GA9 6(FSET
  CAPITAL LOSSES T _C 2 C>RI$ =W>D   #BH
             ,,IT-#CJB;,R#C         C#AA
  96! PO/-ACQUISI;N P]IOD OR 6G5]ATE A
  CAPITAL DIVID5D 6BE PD 2F 3TROL (!
  CORPOR,N IS ACQUIR$ 0ANO!R P]SON OR
  GR\P ( P]SONS4 ,! PROCE$S F ! DEEM$
  4POSI;N (! PROP]TY MAY 2 ANY AM.T
  DESIGNAT$ 0! CORPOR,N T IS NEI LESS
  ?AN ! ADJU/$ CO/ BASE (! PROP]TY NOR
  GRT] ?AN XS FAIR M>KET VALUE IMMLY 2F
  XS DEEM$ 4POSI;N4
#AH4 ,A CORPOR,N MAY DESIGNATE1 9 XS
  RETURN ( 9COME =! TAX,N YE> 5D+ IMMLY
  2F 3TROL 0 ACQUIR$1 !
-------------------------------------#AB
  "PICUL> PROP]TIES 6: ! PROVI.NS (
  P>AGRAPH #AAA7#D77E7 >E 6BE APPLI$ &
  _! PROCE$S ( 4POSI;N4 ,! DESIGN,N MAY
  AL 2 MADE1 OR AN E>LI] "O REVIS$1
  0PRESCRIB$ =M FIL$ )! ,DE"P;T N M ?AN
  #IJ "DS AF ! DATE ( MAIL+ A NOTICE (
  ASSESS;T ( TAX PAYA# = T YE> OR A
  NOTIFIC,N T NO TAX IS PAYA# = T YE>4
#AI4 ,! CORPOR,N IS G5],Y DEEM$
  6REACQUIRE ! PROP]TY 7O!R ?AN C]TA9
  DEPRECIA# PROP]TY--4CUSS$ LAT] 9   #BI
             ,,IT-#CJB;,R#C         A#AB
  ? P>AGRAPH7 DESIGNAT$ =! PURPOSES (
  P>AGRAPH #AAA7#D77E7 AT ! "T 3TROL (!
  CORPOR,N 0 ACQUIR$ AT A CO/ EQUAL 6!
  DESIGNAT$ PROCE$S ( 4POSI;N4 ,=
  PURPOSES (! NON->M'S L5G? EXCEP;N 6!
  HALF-YE> CAPITAL CO/ ALL[.E 3V5;N 9
  SUBSEC;N #AAJJ7#B.B7 (! ,REGUL,NS1 !
  CORPOR,N IS 3SID]$ N 6BE D1L+ ) XF AT
  >M'S L5G?4

  ,IF ! PROP]TY DESIGNAT$ "U P>AGRAPH
  #AAA7#D77E7 0 A DEPRECIA# PROP]TY )A
  CAPITAL CO/ : IS LESS ?AN ! DESIGNAT$
  PROCE$S ( 4POSI;N1 ! CAPITAL CO/ 6!
  CORPOR,N (! PROP]TY 7O!R ?AN A TIMB]
  RES\RCE PROP]TY7 AT ! "T (!
  REACQUISI;N IS LIMIT$ 6! PREVI\S
  CAPITAL CO/ PLUS ?REE-QU>T]S 7REF] 6!
  LAW =! RELEVANT FRAC;N = TAX,N YE>S
  -M5C+ PRIOR 6#AIIJ7 (! EXCESS (!
  DESIGNAT$ PROCE$S ( 4POSI;N OV] T
  CAPITAL CO/ 0VIRTUE ( P>AGRAPH
  #AC7#G77F74
                                     #CJ
             ,,IT-#CJB;,R#C         B#AB
  ,= ACQUISI;NS ( 3TROL O3URR+ AF ,JULY
  #AC1 #AIIJ1 ": ! DESIGNAT$ PROP]TY IS
  DEPRECIA# PROP]TY )A CAPITAL CO/ 9
  EXCESS (! DESIGNAT$ PROCE$S ( 4POSI;N1
  ! ORIG9AL CO/ IS 6BE MA9TA9$ &! DI6];E
  2T T CO/ &! PROCE$S ( 4POSI;N IS 6BE
  TR1T$ Z HAV+ BE5 PREVI\SLY ALL[$ Z
  CAPITAL CO/ ALL[.E4
#BJ4 ,A DEBT OBLIG,N 7PAYA#7 (A CORPOR,N
  7I4E4 A DEBTOR7 IS N PROP]TY )9 ! M1N+
  ( SUBSEC;N #BDH7#A74 ,3SEQU5TLY1
  P>AGRAPH #AAA7#D77D7 WD N APPLY 6AN
  UNR1LIZ$ =EIGN EX*ANGE LOSS ON A DEBT
  OBLIG,N (A CORPOR,N :5 "! HAS BE5 AN
  ACQUISI;N ( 3TROL (! CORPOR,N4
  ,SIMIL>LY1 A DESIGN,N "U P>AGRAPH
  #AAA7#D77E7 WD N 2 AVAILA# = AN
  UNR1LIZ$ =EIGN EX*ANGE GA9 ON S* A
  DEBT OBLIG,N4




                                     #CA
         ,A3RU$ ,T]M9AL ,LOSSES     C#AB
    
#BA4 ,": 3TROL (A CORPOR,N IS ACQUIR$ 0A
  P]SON OR GR\P ( P]SONS1 SUBSEC;N
  #AAA7#E.A7 G5],Y PROVIDES T "! % 2
  DEDUCT$ 9 -PUT+ ! CORPOR,N'S 9COME =!
  TAX,N YE> 5D+ IMMLY 2F ! ACQUISI;N (
  3TROL ! AM.T1 IF ANY1 0:
-------------------------------------#AC
  7A7 ! UNDEPRECIAT$ CAPITAL CO/ (
    PROP]TY (A PRESCRIB$ CLASS IMMLY 2F
    ! ACQUISI;N ( 3TROL 7DET]M9$ )\T
    REG>D 6SUBSEC;N #AC7#BD7 :1 9 "S
    CASES PO/P"OS1 UNTIL AF ! ACQUISI;N
    ( 3TROL1 ! A4I;N (! CO/ ( REC5TLY
    ACQUIR$ PROP]TY 6! UNDEPRECIAT$
    CAPITAL CO/ (! CLASS71
  EXCE$S ! TOTAL (
  7B7 ! FAIR M>KET VALUE ( ALL ! PROP]TY
    (! CLASS IMMLY 2F ! ACQUISI;N (
    3TROL1 &
  7C7 ! AM.T ( CAPITAL CO/ ALL[.E OR
    T]M9AL LOSS O!RWISE ALL[$ 9 RESPECT
    ( T CLASS1 =! TAX,N YE> T 5D$1
                                     #CB
             ,,IT-#CJB;,R#C         A#AC
    PURSUANT 6SUBSEC;N #BDI7#D71 IMMLY
    2F ! ACQUISI;N ( 3TROL4
  
  ,! AM.T DEDUCT$ IS DEEM$ 6H BE5 ALL[$
  Z CAPITAL CO/ ALL[.E4 ,6! EXT5T T !
  DEDUC;N CR1TES OR 9CR1SES ! CORPOR,N'S
  NON-CAPITAL LOSS OR F>M LOSS = T TAX,N
  YE>1 ! LOSS MAY 2 DEDUCT$ 9 -PUT+ !
  CORPOR,N'S TAXA# 9COME = PREVI\S TAX,N
  YE>S1 B X MAY ONLY 2 DEDUCT$ 9 LAT]
  TAX,N YE>S SUBJECT 6! /R1M+ RULES
  EXPLA9$ 9 #AC ABV4

       ,A3RU$ ,LOSSES ) ,RESPECT
     6,CUMULATIVE ,ELIGI# ,CAPITAL
    
#BB4 ,": 3TROL (A CORPOR,N IS ACQUIR$ 0A
  P]SON OR GR\P ( P]SONS1 SUBSEC;N
  #AAA7#E.B7 PROVIDES T "! % 2 DEDUCT$ 9
  -PUT+ ! CORPOR,N'S 9COME =! TAX,N YE>
  5D+ IMMLY 2F ! ACQUISI;N ( 3TROL !
  AM.T1 IF ANY1 0:3

                                     #CC
             ,,IT-#CJB;,R#C         B#AC
  7A7 ! CUMULATIVE ELIGI# CAPITAL 9
    RESPECT (A BUSI;S IMMLY 2F !
    ACQUISI;N ( 3TROL
  EXCE$S ! TOTAL (
  7B7 A FRAC;N 99 (! FAIR M>KET VALUE (!
    ELIGI# CAPITAL PROP]TY 9 RESPECT (!
    BUSI;S1 &
  7C7 ! AM.T O!RWISE DEDUCT$ "U P>AGRAPH
    #BJ7#A77B7 9 -PUT+ XS 9COME =! TAX,N
    YE> T 5D$1 PURSUANT 6SUBSEC;N
    #BDI7#D71 IMMLY 2F ! ACQUISI;N (
    3TROL4
  
  ,6! EXT5T T ? DEDUC;N CR1TES OR
  9CR1SES A NON-CAPITAL LOSS OR F>M LOSS
  = T TAX,N YE>1 ! -;TS 9 #AC ABV REG>D+
  ! /R1M+ RULES W APPLY4

99 ,! FRAC;N REF]R$ 6IN 7B7 ABV IS ?REE-
  QUAT]S ": 3TROL (! CORPOR,N 0 ACQUIR$
  AF ! -M;E;T ( XS F/ TAX,N YE> -M5C+ AF
  ,JUNE #AIHH2 O!RWISE X IS "O-HALF4

                                     #CD
       ,RES]VES = ,D\BT;L ,A3.TS     #AD
    
#BC4 ,": 3TROL (A CORPOR,N IS ACQUIR$ 0A
  P]SON OR GR\P ( P]SONS1 SUBSEC;N
  #AAA7#E.C7 PROVIDES T NO AM.T MAY 2
  DEDUCT$ "U P>AGRAPH #BJ7#A77L7 Z A
  RES]VE = D\BT;L DEBTS 9 -PUT+ !
  CORPOR,N'S 9COME =! TAX,N YE> T 5D$
  IMMLY 2F ! ACQUISI;N ( 3TROL4 ,9/1D1
  ANY AM.T T WD H BE5 DEDUCTI# Z A
  D\BT;L DEBT IS DEEM$ 6BE A SEP>ATE
  DEBT & IS REQUIR$ 6BE DEDUCT$ "U
  P>AGRAPH #BJ7#A77P7 Z A BAD DEBT 9
  -PUT+ ! CORPOR,N'S 9COME = T TAX,N
  YE>4 ,6! EXT5T T ? DEDUC;N CR1TES OR
  9CR1SES A NON-CAPITAL LOSS OR F>M LOSS
  = T TAX,N YE>1 ! -;TS 9 #AC ABV REG>D+
  ! /R1M+ RULES W APPLY4 ,ANY AM.T RCVD
  0! CORPOR,N 9 SUBSEQU5T YE>S 9 RESPECT
  ( ? SEP>ATE DEBT W 2 9CLUD$ 9 !
  CORPOR,N'S 9COME 9 ! YE> ( RECEIPT
  PURSUANT 6P>AGRAPH #AB7#A77I74 ,!
  EXCESS (! AM.T (! ORIG9AL DEBT OV] !
  AM.T (! SEP>ATE DEBT 7I4E4 ! POR;N (!
  ORIG9AL DEBT : 0 N ( D\BT;L        #CE
             ,,IT-#CJB;,R#C         A#AD
  COLLECTABIL;Y AT ! "T (! ACQUISI;N (
  3TROL7 IS XF 3SID]$ 6BE A SEP>ATE DEBT
  T 0 9CURR$ AT ! SAME "T & "U ! SAME
  CIRCUM/.ES Z ! ORIG9AL DEBT 0 9CURR$4

          ,*ANGE 9 ,TAX ,/ATUS
    
#BD4 ,! RULES 9 P>AGRAPHS #AAA7#D77C7 TO
  7E7 & SUBSEC;NS #AAA7#E.A7 TO 7#E.C7
  4CUSS$ 9 #AF 6#BC ABV1 D N APPLY1 IF
  AT ! "T (! ACQUISI;N ( 3TROL1 !
  CORPOR,N 2COMES OR C1SES 6BE EXEMPT F
  TAX "U ,"P ;,I (! ,ACT4

       ,A3RU$ ,LOSSES 9 ,9V5TORY
    
#BE4 ,SUBSEC;N #AJ7#A7 REQUIRES T
  9V5TORY 2 VALU$ AT ! L[] ( XS CO/ OR
  FAIR M>KET VALUE4 ,ALT]NATIVELY1 SEC;N
  #AHJA (! ,REGUL,NS ALL[S ALL 9V5TORY
  6BE VALU$ AT FAIR M>KET VALUE4 ,"!=E1
  ": "! >E A3RU$ 9V5TORY LOSSES DUE 6A
  DECL9E 9 M>KET VALUE RELATIVE 6ORIG9AL
  CO/1 ! 9V5TORY M/ 2 WRITT5-D[N     #CF
             ,,IT-#CJB;,R#C         B#AD
  6REFLECT S* LOSSES 9 ! TAX,N YE> T IS
  DEEM$ 65D IMMLY 2F ! ACQUISI;N (
  3TROL4 ,6! EXT5T T ? WRITE-D[N CR1TES
  OR 9CR1SES A NON-CAPITAL LOSS OR F>M
  LOSS = T TAX,N YE>1 ! -;TS 9 #AC ABV
  REG>D+ ! /R1M+ RULES W APPLY4

         ,ANTI-,AVOID.E ,RULES
    
#BF4 ,SUBSEC;N #AAA7#E.E7 IS AN ANTI-
  AVOID.E RULE : W APPLY ": 3TROL (A
  CORPOR,N IS ACQUIR$ &! MA9 R1SON =!
  ACQUISI;N ( 3TROL MAY R1SONABLY 2
  3SID]$ 6BE 6RECOGNIZE
-------------------------------------#AE
  A3RU$ LOSSES "U P>AGRAPH #AAA7#D77D7
  OR DEDUC;NS "U SUBSEC;NS #AAA7#E.A71
  7#E.B7 OR 7#E.C7 7SEE #AF1 #BA1 #BB &
  #BC RESPECTIVELY1 ABV74 ,": SUBSEC;N
  #AAA7#E.E7 APPLIES1 ! PROVI.N T IS
  ATTEMPT$ 6BE TRI7]$ DOES N APPLY &!
  ELEC;N "U P>AGRAPH #AAA7#D77E7 IS N
  AVAILA#4 ,IF ! PROVI.N ATTEMPT$ 6BE
                                     #CG
             ,,IT-#CJB;,R#C         A#AE
  TRI7]$ IS P>AGRAPH #AAA7#D77D71
  P>AGRAPH #AAA7#D77C7 DOES N APPLY4

  ,SUBSEC;N #BEF7#H7 MAY APPLY 6DET]M9E
  :E!R 3TROL (A CORPOR,N HAS BE5 ACQUIR$
  =! PURPOSE ( SEC;N #AAA & O!R SEC;NS
  (! ,ACT4 ,? SUBSEC;N IS AN ANTI-
  AVOID.E RULE : W DEEM %>ES 6H BE5
  ACQUIR$ AT ! "T A TAXPAY] HAS ACQUIR$
  A "R 6%>ES REF]R$ 6IN P>AGRAPH
  #BEA7#E77B71 ": X C R1SONABLY 2 3CLUD$
  T "O (! MA9 PURPOSES (! ACQUISI;N (!
  "R 0 6AVOID1 AM;G O!R ITEMS1 ANY
  LIMIT,N (! DEDUCTIBIL;Y ( ANY NON-
  CAPITAL LOSS1 NET CAPITAL LOSS OR F>M
  LOSS4

       ,LOSS ,UTILIZ,N ,FOLL[+ AN
               ,AMALGAM,N
    
#BG4 ,SUBSEC;N #HG7#B.A7 ALL[S A NEW
  CORPOR,N =M$ Z A RESULT ( AN AMALGAM,N
  6UTILIZE ! NON-CAPITAL LOSSES1 NET
  CAPITAL LOSSES1 RE/RICT$ F>M       #CH
             ,,IT-#CJB;,R#C         B#AE
  LOSSES1 F>M LOSSES & LIMIT$ "PN]%IP
  LOSSES (! PR$ECESSOR CORPOR,NS4 ,!
  UTILIZ,N ( ^! LOSSES 0! NEW CORPOR,N
  IS SUBJECT 6! RE/RIC;NS 9 SUBSEC;NS
  #AAA7#C7 TO 7#E.D7 & P>AGRAPH
  #ADI7#AJ77D7 Z 6! ORD] & EXT5T 6: !
  LOSSES >E US$ &! E6ECT ( AN ACQUISI;N
  ( 3TROL4 ,P>AGRAPH #HG7#B.A77E7 G5],Y
  DOES N ALL[ ! LOSSES 9CURR$ 0! NEW
  CORPOR,N 6BE C>RI$ BACK = DEDUC;N 6ANY
  PR$ECESSOR CORPOR,N4 ,H["E1 =
  AMALGAM,NS (A P>5T CORPOR,N & "O OR M
  ( XS :OLLY-[N$ SUBSIDI>IES O3URR+ AF
  #AIHI1 & SUBJECT 6! PROVI.NS ( SEC;N
  #AAA1 SUBSEC;N #HG7#B.AA7 W ALL[ !
  AMALGAMAT$ CORPOR,N 6C>RY BACK 6!
  PR$ECESSOR P>5T CORPOR,N LOSSES X HAS
  9CURR$ AF ! AMALGAM,N4
#BH4 ,P>AGRAPH #BEF7#G77B7 PROVIDES T ":
  A P]SON OR GR\P ( P]SONS 3TROLL$ ! NEW
  CORPOR,N AF ! AMALGAM,N B T P]SON OR
  GR\P ( P]SONS DID N 3TROL A "PICUL>
  PR$ECESSOR CORPOR,N1 T P]SON OR GR\P (
  P]SONS IS DEEM$ 6H ACQUIR$ 3TROL   #CI
             ,,IT-#CJB;,R#C         C#AE
  ( T PR$ECESSOR CORPOR,N IMMLY 2F !
  AMALGAM,N4 ,ACLY1 ! RE/RIC;NS 9
  SUBSEC;NS #AAA7#D7 TO 7#E.D7 7SEE #AB
  6#BC ABV7 W APPLY 6! LOSSES ( T
  PR$ECESSOR CORPOR,N4 ,P>AGRAPH
  #BEF7#G77B7 DOES N APPLY1 H["E1 IF !
  P]SON OR GR\P ( P]SONS :O 3TROL !
  AMALGAMAT$ CORPOR,N WD N H BE5 3SID]$
  6H ACQUIR$ 3TROL (! "PICUL>
-------------------------------------#AF
  PR$ECESSOR CORPOR,N IF T P]SON OR GR\P
  ( P]SONS _H ACQUIR$ ALL ! %>ES (!
  PR$ECESSOR CORPOR,N IMMLY 2F !
  AMALGAM,N4 ,"!=E1 ON ! AMALGAM,N ( TWO
  OR M PR$ECESSOR CORPOR,NS : 7 3TROLL$
  0RELAT$ P]SONS PRIOR 6! AMALGAM,N1
  P>AGRAPH #BEF7#G77A7 W APPLY 7SEE #I
  ABV7 S T 3TROL (! "PICUL> PR$ECESSOR
  CORPOR,N W N 2 TR1T$ Z HAV+ *ANG$4
  7,SEE EXAMPLES #E & #F 9 ! APP5DIX74



                                     #DJ
       ,LOSS ,UTILIZ,N ,FOLL[+ !    A#AF
        ,W9D+-,UP (A #IJ@3P ,[N$
               ,SUBSIDI>Y
    ,NON-,CAPITAL ,LOSSES1 ,RE/RICT$
      ,F>M ,LOSSES1 ,F>M ,LOSSES &
        ,LIMIT$ ,"PN]%IP ,LOSSES
    
#BI4 ,": A SUBSIDI>Y CORPOR,N 7A
  ,CANADIAN CORPOR,N7 HAS BE5 W.D UP
  96XS P>5T CORPOR,N 7A ,CANADIAN
  CORPOR,N7 "U ! PROVI.NS ( SUBSEC;N
  #HH7#A71 ! P>5T'S UTILIZ,N (!
  SUBSIDI>Y'S NON-CAPITAL LOSSES1
  RE/RICT$ F>M LOSSES1 F>M LOSSES &
  LIMIT$ "PN]%IP LOSSES IS PROVID$ = 9
  SUBSEC;N #HH7#A.A74

  ,ANY S* LOSS (! SUBSIDI>Y CORPOR,N IS
  G5],Y DEEM$ 6BE A LOSS (! SAME TYPE 6!
  P>5T =! TAX,N YE> (! P>5T 9 : !
  SUBSIDI>Y'S LOSS YE> 5D$1 PROVID$ S*
  LOSS3
  7A7 0 N PREVI\SLY DEDUCT$ 9 -PUT+ !
    TAXA# 9COME (! SUBSIDI>Y1 &
                                     #DA
             ,,IT-#CJB;,R#C         B#AF
  7B7 WD H BE5 DEDUCTI# 9 -PUT+ ! TAXA#
    9COME (! SUBSIDI>Y = ANY TAX,N YE>
    2G9N+ AF ! -M;E;T (! W9D+-UP ON !
    ASSUMP;N T X _H S* A TAX,N YE>1 &
    SU6ICI5T 9COME 6UTILIZE ! LOSS4
  
  ,H["E1 S* LOSSES >E AVAILA# 6! P>5T 9
  -PUT+ XS TAXA# 9COME ONLY = TAX,N YE>S
  T 2GAN AF ! -M;E;T (! W9D+-UP 7G5],Y1
  ! -M;E;T ( W9D+-UP IS EVID;ED 0A
  RESOLU;N ( %>EHOLD]S AU?ORIZ+ OR
  REQUIR+ T ! CORPOR,N 2 W.D UP74 ,=
  EXAMPLE1

  ,P>5T ,CO4 7;,Y/;,E ,DEC4 #CA/IJ7
  #AJJ@3P ,SUB ,CO4 7;,Y/;,E ,JUNE
  #CJ/IJ7

  ,IF ,SUB ,CO4 -M;ES 6W9D-UP 96,P>5T
  ,CO4 ON ,AUGU/ #CA1 #AIIJ1 ANY LOSSES
  ( ,SUB ,CO4 W ONLY 2 AVAILA# 6,P>5T
  ,CO4 -M5C+ 9 ,P>5T ,CO4'S TAX,N YE>
  5D+ ,DECEMB] #CA1 #AIIA4
                                     #DB
             ,,IT-#CJB;,R#C          #AG
#CJ4 ,":1 "U P>AGRAPHS #HH7#A.A77C71 7D7
  OR 7D4#A71 A SUBSIDI>Y'S NON-CAPITAL
  LOSS1 RE/RICT$ F>M LOSS1 F>M LOSS1 OR
  LIMIT$ "PN]%IP LOSS IS DEEM$ 6BE A
  LOSS (! SAME TYPE (! P>5T =A "PICUL>
  TAX,N YE> (! P>5T 2G9N+ AF ! -M;E;T (!
  W9D+-UP1 ! P>5T MAY ELECT "U P>AGRAPH
  #HH7#A.A77F7 6TR1T ! "PICUL> LOSS Z
  HAV+ >IS5 9 XS PREC$+ TAX,N YE>4 ,?
  ELEC;N1 : C 2 MADE = #AIHE & SUBSEQU5T
  TAX,N YE>S1 MAY A3EL]ATE ! P>5T'S
  A3ESS 6"PICUL> LOSSES (! SUBSIDI>Y
  9CURR$ 9 ! YE> (! W9D+-UP4 ,? C 2
  ILLU/RAT$ 9 ! FOLL[+ EXAMPLE3

  ,P>5T ,CO4 7;,Y/;,E ,OCT4 #CA/IJ7
  #AJJ@3P ,SUB ,CO4 7;,Y/;,E ,DEC4
  #CA/IJ7

  ,ASSUME ,SUB ,CO4 -M;ES 6W9D-UP
  96,P>5T ,CO4 ON ,OCTOB] #CA1 #AIIJ &
  ,SUB ,CO4 9CURS A NON-CAPITAL LOSS (
  4#A1JJJ1JJJ =! YE> 5D$ ,DECEMB] #CA1
  #AIIJ4 ,! 4#A1JJJ1JJJ LOSS IS      #DC
             ,,IT-#CJB;,R#C         A#AG
  DEEM$ "U P>AGRAPH #HH7#A.A77C7 6BE A
  NON-CAPITAL LOSS ( ,P>5T ,CO4 = XS
  TAX,N YE> 5D+ ,OCTOB] #CA1 #AIIA 7I4E4
  ! TAX,N YE> (! P>5T 9 : ! SUBSIDI>Y'S
  LOSS YE> 5D$74 ,H["E1 ! P>5T'S TAX,N
  YE> 2G9N+ AF ! -M;E;T (! W9D+-UP IS AL
  ,OCTOB] #CA1 #AIIA4 ,S9CE P>AGRAPH
  #AAA7#A77A7 ONLY P]MITS A DEDUC;N =
  NON-CAPITAL LOSSES 9 ! IMMLY PREC$+ #C
  YE>S &! IMMLY FOLL[+ #G YE>S 7I4E4 N !
  CURR5T YE>71 ! NON-CAPITAL LOSS W N 2
  AVAILA# 6,P>5T ,CO4 UNTIL XS ,OCTOB]
  #CA1 #AIIB TAX,N YE>4 ,H["E1 IF ,P>5T
  ,CO4 ELECTS "U P>AGRAPH #HH7#A.A77F71
  ! NON-CAPITAL LOSS W 2 DEEM$ 6H >IS5 9
  XS IMMLY PREC$+ TAX,N YE> 7,OCTOB]
  #CA1 #AIIJ74 ,"!=E1 IF ! ELEC;N IS
  MADE1 ,P>5T ,CO4 W 2 A# 6DEDUCT !
  4#A1JJJ1JJJ NON-CAPITAL LOSS 9 XS
  TAX,N YE> 5D+ ,OCTOB] #CA1 #AIIA4



                                     #DD
          ,ACQUISI;N ( ,3TROL       B#AG
    
#CA4 ,! G5]AL RULE1 :5 "! HAS BE5 AN
  ACQUISI;N ( 3TROL (! P>5T OR
  SUBSIDI>Y1 IS T NO AM.T (! SUBSIDI>Y'S
  NON-CAPITAL LOSS OR F>M LOSS =A TAX,N
  YE> 5D+ 2F ! ACQUISI;N ( 3TROL IS
  DEDUCTI# 0! P>5T =A TAX,N YE> 5D+ AF !
  ACQUISI;N ( 3TROL4 ,H["E1 ANY POR;N (!
  SUBSIDI>Y'S NON-CAPITAL LOSS OR F>M
  LOSS Z MAY R1SONABLY REG>D$ Z
-------------------------------------#AH
  7A7 XS LOSS F C>RY+ ON A BUSI;S1 &
  7B7 7": ! LOSS 0 9CURR$ AF ! #AIHG
    TAX,N YE>7 2+ 9 RESPECT ( AN AM.T
    DEDUCTI# "U P>AGRAPH #AAJ7#A77K71 ":
    ! BUSI;S 0 C>RI$ ON 0! SUBSIDI>Y 9 T
    YE>1
  
  IS DEDUCTI# 0! P>5T IF T BUSI;S IS
  C>RI$ ON = PR(IT OR A R1SONA# EXPECT,N
  ( PR(IT "?\T ! "PICUL> YE>4 ,! AM.T
  DEDUCTI# IS LIMIT$ 69COME =! "PICUL>
  YE> F .T .BUSI;S OR A .SIMIL> .BUSI;S
                                     #DE
             ,,IT-#CJB;,R#C         A#AH
  PURSUANT 6SUBP>AGRAPH
  #HH7#A.A77E77;II7 7SEE #AC & #AD ABV74

  ,":1 FOLL[+ A W9D+-UP1 ! LOSSES (A
  SUBSIDI>Y 2COME AVAILA# 6XS P>5T1 ^?
  LOSSES W AG 2 FL[$ "? ON A SUBSEQU5T
  W9D+-UP (! P>5T 96XS P>5T4 ,H["E1 6!
  EXT5T T ! DEDUCTIBIL;Y ( ^? LOSSES 0
  LIMIT$ 0P>AGRAPH #HH7#A.A77E7 FOLL[+ !
  F/ W9D+-UP1 ! SAME LIMIT,NS W APPLY
  FOLL[+ ! SUBSEQU5T W9D+-UP4
#CB4 ,PRIOR 6,NOVEMB] #AC1 #AIHA1 !
  PROVI.NS ( SUBSEC;N #HH7#A.A7 DID N
  ID5TIFY ! LOSSES1 : 7 TRANSF]R$ 6!
  P>5T1 ) ANY "PICUL> BUSI;S4 ,!
  PROVI.NS ( SUBSEC;N #AAA7#E71 APPLICA#
  AF ,NOVEMB] #AB1 #AIHA1 REQUIRE T NON-
  CAPITAL LOSSES 2 ATTRIBUT$ 6A "PICUL>
  BUSI;S 9 ORD] 6BE ELIGI# = C>RYOV]4
  ,SUBSEC;N #AAA7#E.D7 PROVIDES !
  ID5TIFIC,N ( NON-CAPITAL LOSSES NEC =!
  APPLIC,N ( SUBSEC;N #AAA7#E74

                                     #DF
         ,NET ,CAPITAL ,LOSSES      B#AH
    
#CC4 ,": A SUBSIDI>Y CORPOR,N 7A
  ,CANADIAN CORPOR,N7 HAS BE5 W.D UP
  96XS P>5T CORPOR,N 7A ,CANADIAN
  CORPOR,N7 "U ! PROVI.NS ( SUBSEC;N
  #HH7#A71 ! P>5T'S UTILIZ,N (!
  SUBSIDI>Y'S NET CAPITAL LOSSES IS
  PROVID$ = 9 SUBSEC;N #HH7#A.B74

  ,ANY NET CAPITAL LOSS (! SUBSIDI>Y =A
  "PICUL> TAX,N YE> IS DEEM$ 6BE A NET
  CAPITAL LOSS (! P>5T =! TAX,N YE> (!
  P>5T 9 : ! SUBSIDI>Y'S "PICUL> TAX,N
  YE> 5D$1 PROVID$ S* LOSS3
  7A7 0 N PREVI\SLY DEDUCT$ 9 -PUT+
    TAXA# 9COME (! SUBSIDI>Y1 &
  7B7 WD H BE5 DEDUCTI# 9 -PUT+ ! TAXA#
    9COME (! SUBSIDI>Y = ANY TAX,N YE>
    (! SUBSIDI>Y 2G9N+ AF ! -M;E;T (!
    W9D+-UP ON ! ASSUMP;N T X _H S* A
    TAX,N YE> & T X _H SU6ICI5T 9COME &
    TAXA# CAPITAL GA9S = T YE>4
  
                                     #DG
             ,,IT-#CJB;,R#C          #AI
  ,Z )! NON-CAPITAL LOSSES1 ETC41 9
  SUBSEC;N #HH7#A.A71 ! NET CAPITAL
  LOSSES (! SUBSIDI>Y >E AVAILA# 6! P>5T
  9 -PUT+ XS TAXA# 9COME ONLY = TAX,N
  YE>S T 2GAN AF ! -M;E;T (! W9D+-UP4

  ,AN ELEC;N "U P>AGRAPH #HH7#A.B77D7 IS
  AVAILA# 6! P>5T : CD A3EL]ATE A3ESS 6A
  "PICUL> NET CAPITAL LOSS (! SUBSIDI>Y4
  ,! ELEC;N IS V SIMIL> 6! P>AGRAPH
  #HH7#A.A77F7 ELEC;N DESCRIB$ 9 #CJ
  ABV4

          ,ACQUISI;N ( ,3TROL
    
#CD4 ,SUBSEC;N #HH7#A.B7 DOES N APPLY
  6P]MIT ! P>5T 6DEDUCT1 9 A "PICUL>
  TAX,N YE>1 ANY AM.T 9 RESPECT (!
  SUBSIDI>Y'S NET CAPITAL LOSS IF1 2F !
  5D ( T "PICUL> YE>1 3TROL (! P>5T OR !
  SUBSIDI>Y HAS BE5 ACQUIR$ 0A P]SON OR
  P]SONS :O DID N 3TROL ! P>5T OR !

                                     #DH
             ,,IT-#CJB;,R#C         A#AI
  SUBSIDI>Y1 Z ! CASE MAY BE1 AT ! 5D (!
  SUBSIDI>Y'S TAX,N YE> : GAVE RISE 6!
  NET CAPITAL LOSS4

    ,": ,P>5T ,=M$ ,AF ,SUBSIDI>Y'S
               ,LOSS ,YE>
    
#CE4 ,X MAY 2 T A P>5T CORPOR,N 0
  9CORPORAT$ OR O!RWISE =M$ AF ! 5D (A
  TAX,N YE> 9 : XS SUBSIDI>Y 9CURR$ A
  LOSS 7LOSS YE>74 ,9 ^! CIRCUM/.ES1
  SUBSEC;N #HH7#A.C7 DEEMS ! P>5T3
  7A7 6H BE5 9 EXI/;E "?\T ! P]IOD -M5C+
    IMMLY 2F ! 5D (! SUBSIDI>Y'S F/ LOSS
    YE> & 5D+ IMMLY AF ! P>5T'S ACTUAL
    9CORPOR,N OR =M,N1
  7B7 6H _H FISCAL P]IODS "?\T T P]IOD
    5D+ ON ! "D (! YE> ON : XS F/ FISCAL
    P]IOD 5D$1 &
  7C7 6H BE5 3TROLL$ "?\T T P]IOD 0!
    P]SON OR P]SONS :O 3TROLL$ X IMMLY
    AF XS 9CORPOR,N OR =M,N4
#CF4 ,": A SUBSIDI>Y'S NET CAPITAL
  LOSSES H BE5 C>RI$ =W>D 6! P>5T    #DI
             ,,IT-#CJB;,R#C         B#AI
  -PANY1 ! PROVI.NS ( SUBSEC;NS
  #HH7#A.A7 TO 7#A.C7 C 2 EQU,Y APPLICA#
  6! SUBSIDI>Y'S NET CAPITAL LOSSES 7:
  >E DEEM$ 6BE LOSSES (! P>5T7 9 ! EV5T
  T ! P>5T IS W.D-UP 96XS P>5T PURSUANT
  6SUBSEC;N #HH7#A74
-------------------------------------#BJ
  ,IF Y H ANY -;TS REG>D+ ! MATT]S
4CUSS$ 9 ? BULLET91 PL1SE S5D !M TO3

  ,DIRECTOR1 ,TE*NICAL ,PUBLIC,NS
    ,DIVI.N
  ,LEGISLATIVE & ,9T]GOV]N;TAL ,A6AIRS
    ,BRAN*
  ,REV5UE ,CANADA4 ,CU/OMS1 ,EXCISE &
    ,TAX,N
  #HGE ,H]ON ,ROAD
  ,OTTAWA1 ,ONT>IO
  ,K#A;,A #J;,L#H




                                     #EJ
                ,APP5DIX             #BA
    
,EXAMPLE #A
  ,CORPOR,N ;,A ORIG9,Y _H DIRECT 3TROL
  ( ,CORPOR,NS ;,B & ;,C4 ,CORPOR,N ;,A
  !N TRANSF]R$ XS 3TROLL+ %>ES (
  ,CORPOR,N ;,C 6,CORPOR,N ;,B4 ,S9CE
  ,CORPOR,NS ;,B & ;,C 7 RELAT$ 0VIRTUE
  ( SUBP>AGRAPH #BEA7#B77C77;I7 IMMLY 2F
  ! ACQUISI;N ( ,CORPOR,N ;,C'S %>ES
  0,CORPOR,N ;,B1 ,CORPOR,N ;,B IS DEEM$
  N 6H ACQUIR$ 3TROL ( ,CORPOR,N ;,C
  0VIRTUE ( SUBP>AGRAPH #BEF7#G77A77;I74
  ,AL1 S9CE ,CORPOR,N ,A HAS RETA9$
  3TROL ( ,CORPOR,N ;,C 7AL? 9DIRECT71
  "! IS N 3SID]$ 6BE AN ACQUISI;N (
  3TROL4

,EXAMPLE #B
  ,CORPOR,N ;,A ORIG9,Y _H DIRECT 3TROL
  ( ,CORPOR,N ;,B & 9DIRECT 3TROL (
  ,CORPOR,N ;,C4 ,CORPOR,N ;,B !N
  TRANSF]R$ XS 3TROLL+ %>ES ( ,CORPOR,N
  ;,C 6,CORPOR,N ;,A4 ,S9CE ,CORPOR,N
  ;,A HAS ACQUIR$ DIRECT 3TROL (A    #EA
             ,,IT-#CJB;,R#C         A#BA
  CORPOR,N : X PREVI\SLY 3TROLL$
  9DIRECTLY1 "! IS NO ACQUISI;N ( 3TROL
  ( ,CORPOR,N ;,C4 ,SUBP>AGRAPH
  #BEF7#G77A77;I7 AL APPLIES4

,EXAMPLE #C
  ,CORPOR,N ;,A ORIG9,Y _H DIRECT 3TROL
  ( ,CORPOR,NS ;,B & ;,D1 & 9DIRECT
  3TROL ( ,CORPOR,N ;,C4 ,CORPOR,N ;,A
  !N TRANSF]R$ XS 3TROLL+ %>ES (
  ,CORPOR,N ;,B 6,CORPOR,N ;,D4 ,S9CE
-------------------------------------#BB
  ,CORPOR,N ;,D 0 RELAT$ 6,CORPOR,N ;,B1
  0VIRTUE ( SUBP>AGRAPH #BEA7#B77C77;I71
  IMMLY PRIOR 6! ACQUISI;N ( ,CORPOR,N
  ;,B'S %>ES 0,CORPOR,N ;,D1 ,CORPOR,N
  ;,D IS DEEM$ N 6H ACQUIR$ 3TROL (
  ,CORPOR,N ;,B 0VIRTUE ( SUBP>AGRAPH
  #BEF7#G77A77;I74 ,AL1 = ACQUISI;NS AF
  #AIHI1 ,CORPOR,N ;,D IS DEEM$ N 6H
  ACQUIR$ 3TROL ( ANY CORPOR,N 3TROLL$
  0,CORPOR,N ;,B 0VIRTUE ( P>AGRAPH
  #BEF7#G77A74 ,"!=E1 "! IS NO ACQUISI;N
  ( 3TROL ( ,CORPOR,N ;,C4 ,IF !     #EB
             ,,IT-#CJB;,R#C         A#BB
  ACQUISI;N TOOK PLACE 2F #AIIJ "! WD AL
  2 NO ACQUISI;N ( ,CORPOR,N ;,C S9CE
  ,CORPOR,N ;,A 3TROLL$ ,CORPOR,N ;,C
  79DIRECTLY7 2F ! TRANSAC;N & MA9TA9S
  3TROL ( ,CORPOR,N ;,C 79DIRECTLY7 AF !
  TRANSAC;N4

,EXAMPLE #D
  ,CORPOR,N ;,A PREVI\SLY _H DIRECT
  3TROL ( ,CORPOR,N ;,B & 9DIRECT 3TROL
  ( ,CORPOR,N ;,C4 ;,X1 A P]SON :O IS N
  RELAT$ 6ANY (! ?REE CORPOR,NS1
  ACQUIRES ! 3TROLL+ %>ES ( ,CORPOR,N
  ;,A4 ,9 ! CASE ( ,CORPOR,N ,A1 ;,B &
  ;,C1 3TROL ( ALL ?REE HAS BE5 ACQUIR$
  0;,X1 A P]SON :O DID N PREVI\SLY 3TROL
  ! ?REE CORPOR,NS4 ,SUBP>AGRAPH
  #BEF7#G77A77;I7 DOES N APPLY 2C ;,X 0
  N RELAT$ 6,CORPOR,N ;,A & ;,X DID N
  ACQUIRE %>ES ( ,CORPOR,N ;,B & ;,C1
  NOR 0 ;,X RELAT$ 6!M4 ,SUBSEC;NS
  #AAA7#D7 TO 7#E.E7 & #BDI7#D7 W "!=E
  APPLY4
                                     #EC
             ,,IT-#CJB;,R#C         B#BB
,EXAMPLE #E
  ,CORPOR,N ;,A PREVI\SLY 3TROLL$
  ,CORPOR,NS ;,C & ;,D & 3T9UES 63TROL
  !M 9 ! =M ( ,CORPOR,N ;,,CD1 A
  CORPOR,N >IS+ F ! AMALGAM,N (
  ,CORPOR,NS ;,C & ;,D4 ,ACLY1 S9CE "! 0
  NO ACQUISI;N ( 3TROL1 SUBSEC;NS
  #AAA7#D7 TO 7#E.D7 W N APPLY4
  ,P>AGRAPH #BEF7#G77B7 WD N APPLY 2C !
  P]SON 7,A7 :O
-------------------------------------#BC
  3TROLL$ ! NEW CORPOR,N 7;,,CD7 IMMLY
  AF ! AMALGAM,N 3TROLL$ BO? (!
  PR$ECESSOR CORPOR,NS1 ;,C 7DIRECTLY7 &
  ;,D 79DIRECTLY7 IMMLY 2F ! AMALGAM,N4

,EXAMPLE #F
  ,CORPOR,N ;,A TRANSF]S ! %>ES (
  ,CORPOR,N ;,C 6,CORPOR,N ;,B 2F
  ,CORPOR,NS ;,C & ;,D AMALGAMATE4

  ,S9CE ,CORPOR,N ;,B 0 RELAT$
  6,CORPOR,N ;,C1 0VIRTUE ( SUBP>AGRAPH
  #BEA7#B77C77;I71 IMMLY PRIOR 6!    #ED
             ,,IT-#CJB;,R#C         A#BC
  ACQUISI;N ( ,CORPOR,N ;,C'S %>ES
  0,CORPOR,N ;,B1 ,CORPOR,N ;,B IS DEEM$
  N 6H ACQUIR$ 3TROL ( ,CORPOR,N ;,C
  0VIRTUE ( SUBP>AGRAPH #BEF7#G77A77;I74
  ,:5 ,CORPOR,NS ;,C & ;,D AMALGAMATE1 !
  AMALGAMAT$ CORPOR,N IS 3TROLL$
  0,CORPOR,N ;,B1 : 3TROLL$ BO?
  PR$ECESSOR CORPOR,NS1 "!=E P>AGRAPH
  #BEF7#G77B7 DOES N APPLY4 ,! FACT T
  SUBP>AGRAPH #BEF7#G77A77I7 DEEM$
  ,CORPOR,N ;,B N 6H ACQUIR$ 3TROL (
  ,CORPOR,N ;,C DOES N IMPAIR ;,B'S
  3TROL ( PR$ECESSOR CORPOR,NS ;,C & ;,D
  2F ! AMALGAM,N NOR ;,B'S 3TROL (
  ,CORPOR,N ;,,CD AF ! AMALGAM,N4








                                     #EE
         ,EXPLAN,N ( ,*ANGES =       #BD
          ,9T]PRET,N ,BULLET9
       ,,IT-#CJB;,R#C3 ,LOSSES (A
         ,CORPOR,N--,! ,E6ECT T
         ,ACQUISI;NS ( ,3TROL1
       ,AMALGAM,NS1 & ,W9D+S-UP H
       ON ,_! ,DEDUCTIBIL;Y--,AF
           ,JANU>Y #AE1 #AIHG
               ,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

                ,OV]VIEW
    
  ,9T]PRET,N ,BULLET9 ,,IT-#CJB;,R#C
\TL9ES ! DEDUCTIBIL;Y ( LOSSES 0A
CORPOR,N :5 "! HAS BE5 AN ACQUISI;N (
3TROL1 AMALGAM,N OR W9D+-UP AF ,JANU>Y
#AE1 #AIHG4 ,X EXPLA9S ! M1N+ ( 3TROL1
                                     #EF
             ,,IT-#CJB;,R#C         A#BD
3TROL 0A GR\P ( P]SONS1 &! SPECIAL RULES
= LOSSES 9 S* CIRCUM/.ES4
  ,WE H REVIS$ ? BULLET9 69CORPORATE !
AM5D;TS 5ACT$ 9 #AIHG 0,BILL ;,C-#FD1 :
SIGNIFICANTLY *ANG$ ! LOSS UTILIZ,N
RULES4 ,X AL REFLECTS A NUMB] ( *ANGES
MADE 6^! RULES 9 #AIHH 0,BILL ;,C-#ACI1
9 #AIIA 0,BILL ;,C-#AH1 & 9 #AIIC 0,BILL
;,C-#IB4 ,! RULES 3C]N+ ! DEDUCTIBIL;Y (
LOSSES :5 "! HAS BE5 AN ACQUISI;N (
3TROL1 AMALGAM,N OR W9D+-UP 2F ,JANU>Y
#AF1 #AIHG >E 4CUSS$ 9 ,,IT-#CJB;,R#B1
,LOSSES (A ,CORPOR,N--,! ,E6ECT ON ,_!
,DEDUCTIBIL;Y ( ,*ANGES 9 ,3TROL1
,AMALGAM,N & ,W9D+-UP1 & XS ,SPECIAL
,REL1SE4
  ,DRAFT LEGISL,N 3TA9$ 9 ! ,AM5D;TS 6!
,9COME ,TAX ,ACT & ,RELAT$ ,/ATUTES
REL1S$ 0! ,M9I/] ( ,F9.E ON ,AUGU/ #CJ1
#AIIC1 T A6ECTS ? BULLET9 IS NOT$ 9
P>AGRAPH #I4


                                     #EG
          ,LEGISLATIVE & ,O!R       B#BD
                ,*ANGES
    
  ,NEW P>AGRAPHS #A 6#H EXPLA9 ! 3CEPTS
( 3TROL & ACQUISI;N ( 3TROL4 ,NEW
P>AGRAPH #A 9DICATES T AN ACQUISI;N (
3TROL IS ! CRITICAL EV5T ) RESPECT
6UTILIZ+ ! LOSSES (A CORPOR,N4 ,NEW
P>AGRAPH #B 4CUSSES ! M1N+ ( 3TROL (A
CORPOR,N4 ,NEW P>AGRAPH #C DESCRIBES !
3CEPT ( 3TROL 0A GR\P ( P]SONS1 & NEW
P>AGRAPHS #D1 #E & #F 4CUSS AC;NS 9
3C]T1 : IS AN IMPORTANT "P ( GR\P 3TROL4
,NEW P>AGRAPHS #G & #H \TL9E !
POSSIBIL;Y ( AN ACQUISI;N ( 3TROL ^U
ACQUISI;NS & 4POSI;NS (A M9OR;Y 9T]E/ 9
A CORPOR,N4
-------------------------------------#BE
  ,P>AGRAPH #I 7=M] P>AGRAPH #D7
REFLECTS A ,BILL ;,C-#AH AM5D;T
6P>AGRAPH #BEF7#G77A74 ,AF #AIHI1
P>AGRAPH #BEF7#G77A7 W APPLY 6ACQUISI;NS
( 3TROL RESULT+ F REDEMP;NS & C.ELL,NS (
%>ES 9 A4I;N 6ACQUISI;NS ( 3TROL Z A
RESULT ( %>E ACQUISI;NS4             #EH
             ,,IT-#CJB;,R#C         A#BE
  ,NEW P>AGRAPH #AA 4CUSSES NEW SUBSEC;N
#BDI7#D7 T 0 5ACT$ 0,BILL ;,C-#FD &
AM5D$ 0,BILL ;,C-#AH4 ,? PROVI.N DEEMS !
TAX,N YE> (A CORPOR,N 65D IMMLY 2F "! IS
AN ACQUISI;N ( 3TROL4
  ,P>AGRAPH #AC 7=M] P>AGRAPH #H7
4CUSSES ! C>RY=W>D & C>RYBACK PROVI.NS (
NON-CAPITAL LOSSES & F>M LOSSES "U
P>AGRAPHS #AAA7#E77A7 & 7B7 :5 "! HAS
BE5 AN ACQUISI;N ( 3TROL4 ,PRE-ACQUISI;N
LOSSES C 2 C>RI$ =W>D 6PO/-ACQUISI;N
YE>S1 & PO/-ACQUISI;N LOSSES MAY 2 C>RI$
BACK 6PRE-ACQUISI;N YE>S1 IF !Y >OSE F !
C>RY+ ON (A BUSI;S1 & IF T BUSI;S IS
C>RI$ ON AF ! ACQUISI;N ( 3TROL4 ,NON-
CAPITAL LOSSES & F>M LOSSES C NO L;G] 2
C>RI$ =W>D = DEDUC;N AG/ TAXA# CAPITAL
GA9S : >ISE AF AN ACQUISI;N ( 3TROL4
  ,NEW P>AGRAPH #AD 4CUSSES ! 9T]PRET,N
(! T]MS 8T BUSI;S0 & 8SIMIL>0 : >E US$ 9
SUBSEC;N #AAA7#E74
  ,NEW P>AGRAPHS #AF 6#AI EXPLA9 !
PROVI.NS ( P>AGRAPHS #AAA7#D77C71 7D7 &
7E74 ,NEW P>AGRAPH #AF EXPLA9S T     #EI
             ,,IT-#CJB;,R#C         B#BE
P>AGRAPHS #AAA7#D77C7 & 7D7 REQUIRE
A3RU$ LOSSES ON NON-DEPRECIA# CAPITAL
PROP]TY 6BE RECOGNIZ$ 9 ! TAX,N YE> T
5DS IMMLY 2F AN ACQUISI;N ( 3TROL4 ,NEW
P>AGRAPH #AG REFLECTS ! ,BILL ;,C-#FD
9TRODUC;N ( 7& ,BILL ;,C-#AH AM5D;T TO7
P>AGRAPH #AAA7#D77E74 ,? PROVI.N
PROVIDES A =M ( RELIEF S9CE X ALL[S !
TAXPAY] 6RECOGNIZE ANY A3RU$ GA9S ON O!R
CAPITAL PROP]TY 79CLUD+ DEPRECIA#
PROP]TY7 6(FSET ! LOSSES RECOGNIZ$ "U
P>AGRAPH #AAA7#D77D74 ,NEW P>AGRAPH #AH
D1LS )! ADM9I/RATIVE ASPECTS ( P>AGRAPH
#AAA7#D77E71 & NEW P>AGRAPH #AI 4CUSSES
! REACQUISI;N CO/ ( PROP]TY = : A
DESIGN,N "U P>AGRAPH #AAA7#D77E7 HAS BE5
MADE4
  ,NEW P>AGRAPH #BJ 4CUSSES ! ,DE"P;T'S
POSI;N T A 8DEBT OBLIG,N0 IS N PROP]TY &
IS "!=E N SUBJECT 6! A3RU$ LOSS RULE 9
P>AGRAPH #AAA7#D77D71 &! DESIGN,N RULES
9 P>AGRAPH #AAA7#D77E74

                                     #FJ
             ,,IT-#CJB;,R#C          #BF
  ,P>AGRAPH #BA 7=M] P>AGRAPH #AE7
4CUSSES A3RU$ T]M9AL LOSSES "U SUBSEC;N
#AAA7#E.A7 T M/ 2 RECOGNIZ$ 9 ! TAX,N
YE> T 5DS IMMLY 2F AN ACQUISI;N ( 3TROL4
,9 G5]AL T]MS1 ! A3RU$ T]M9AL LOSS IS !
AM.T ( ,,UCC 9 EXCESS (! TOTAL (! FAIR
M>KET VALUE (! PROP]TY 9 ! CLASS1 &!
,,CCA OR T]M9AL LOSS O!RWISE ALL[$ = T
CLASS =! YE> 5D+ IMMLY 2F ! ACQUISI;N (
3TROL4
  ,P>AGRAPH #BB 7=M] P>AGRAPH #AF7
4CUSSES A3RU$ LOSSES ) RESPECT
6CUMULATIVE ELIGI# CAPITAL "U SUBSEC;N
#AAA7#E.B7 : M/ 2 RECOGNIZ$ 9 ! TAX,N
YE> T 5DS IMMLY 2F AN ACQUISI;N ( 3TROL4
  ,NEW P>AGRAPH #BC REFLECTS ! ,BILL
;,C-#FD 9TRODUC;N ( SUBSEC;N #AAA7#E.C71
: REQUIRES A CORPOR,N 6DEDUCT ! MAXIMUM
AM.T ( XS D\BT;L DEBTS Z A BAD DEBT "U
P>AGRAPH #BJ7#A77P7 9 ! TAX,N YE> T 5DS
IMMLY 2F ! ACQUISI;N ( 3TROL4
  ,NEW P>AGRAPH #BD REFLECTS ! ,BILL
;,C-#FD AM5D;TS 6P>AGRAPHS #AAA7#D77C7
TO 7E7 & SUBSEC;NS #AAA7#E.A7 TO     #FA
             ,,IT-#CJB;,R#C         A#BF
7#E.C74 ,AF ,JANU>Y #AE1 #AIHG ^!
PROVI.NS W N APPLY ON AN ACQUISI;N (
3TROL IF1 AT ! "T (! ACQUISI;N ( 3TROL1
! CORPOR,N 2COMES OR C1SES 6BE EXEMPT F
TAX "U ,"P ;,I4
  ,NEW P>AGRAPH #BE CL>IFIES T A3RU$
LOSSES 9 9V5TORY H 6BE RECOGNIZ$ 9 !
TAX,N YE> T 5DS IMMLY 2F AN ACQUISI;N (
3TROL4 ,^! LOSSES W "!=E 2 RE/RICT$ 0!
PROVI.NS 9 SUBSEC;N #AAA7#E74
  ,NEW P>AGRAPH #BF 4CUSSES SUBSEC;N
#AAA7#E.E71 AN ANTI-AVOID.E RULE
9TRODUC$ 9 ,BILL ;,C-#FD1 : W PREV5T !
APPLIC,N (! A3RU$ LOSS RULES IF "O (!
MA9 R1SONS = ACQUIR+ 3TROL 0 6TRI7] ^!
A3RU$ LOSS RULES4 ,NEW SUBSEC;N #BEF7#H7
IS AL 4CUSS$ 9 P>AGRAPH #BF1 & IS ANO!R
ANTI-AVOID.E PROVI.N4 ,? SUBSEC;N DEEMS
%>ES 6H BE5 ACQUIR$ 7& POSSIBLY AN
ACQUISI;N ( 3TROL 6O3UR7 :5 A TAXPAY]
HAS ACQUIR$ A "R 6%>ES1 & "O (! MA9
PURPOSES (! ACQUISI;N (! "R 0 6AVOID !
ACQUISI;N ( 3TROL RULES4
                                     #FB
             ,,IT-#CJB;,R#C         B#BF
  ,P>AGRAPH #BG 7=M] P>AGRAPH #AI7
REFLECTS A ,BILL ;,C-#FD AM5D;T
6SUBSEC;N #HG7#B.A7 69CLUDE LIMIT$
"PN]%IP LOSSES 9 ! LOSSES T C
-------------------------------------#BG
FL[ "? ON AN AMALGAM,N4 P>AGRAPH #BG AL
4CUSSES ! ,BILL ;,C-#IB A4I;N ( SUBSEC;N
#HG7#B.AA71 : W ALL[ AN AMALGAMAT$
CORPOR,N 6C>RY LOSSES BACK 6(FSET A
PR$ECESSOR'S 9COME 9 C]TA9 CIRCUM/.ES4
  ,NEW P>AGRAPH #BH DESCRIBES ! PROVI.NS
( P>AGRAPH #BEF7#G77B71 : DEEMS AN
ACQUISI;N ( 3TROL (A PR$ECESSOR CORPOR,N
6O3UR 9 C]TA9 AMALGAM,NS4
  ,P>AGRAPH #BI 7=M] P>AGRAPHS #BJ &
#BA7 4CUSSES ! P>5T -PANY'S UTILIZ,N (!
SUBSIDI>Y'S LOSSES :5 "! IS A W9D+-UP4
,X AL REFLECTS A ,BILL ;,C-#AH AM5D;T
6P>AGRAPH #HH7#A.A77B71 : ALL[S ! P>5T
-PANY 6DEDUCT LOSSES (A SUBSIDI>Y T >ISE
2F -PLET+ ! W9D+-UP B DUR+ ! SUBSIDI>Y'S


                                     #FC
             ,,IT-#CJB;,R#C         A#BG
F/ TAX,N YE> 2G9N+ AF ! W9D+-UP -M;ES4
,^! LOSSES 7 N DEDUCTI# 2F ? AM5D;T4
  ,NEW P>AGRAPH #CJ 4CUSSES ! P>AGRAPH
#HH7#A.A77F7 ELEC;N 9TRODUC$ 9 ,BILL
;,C-#AH4 ,9 C]TA9 CIRCUM/.ES1 ? ELEC;N
ALL[S ! P>5T -PANY 6A3ESS ! SUBSIDI>Y
-PANY'S LOSSES A YE> E>LI] ?AN WD
O!RWISE 2 ! CASE4
  ,P>AGRAPH #CA 7=M] P>AGRAPH #BB7
4CUSSES A ,BILL ;,C-#ACI AM5D;T
6P>AGRAPH #HH7#A.A77E71 : 5SURES T :5 A
SUBSIDI>Y -PANY'S LOSSES 2COME AVAILA#
6! P>5T -PANY ON AN ACQUISI;N ( 3TROL1 !
LOSSES W AG 2 AVAILA# ON A SUBSEQU5T
ACQUISI;N ( 3TROL4 ,H["E1 IF ! RE/RIC;NS
9 P>AGRAPH #HH7#A.A77E7 APPLI$ ON ! F/
ACQUISI;N ( 3TROL 9 RESPECT (! LOSSES1 !
SAME RE/RIC;NS W APPLY 6^! LOSSES ON !
SUBSEQU5T ACQUISI;N ( 3TROL4
  ,P>AGRAPH #CC 7"P ( =M] P>AGRAPH #BD7
4CUSSES ! P>5T -PANY'S UTILIZ,N (!
SUBSIDI>Y -PANY'S NET CAPITAL LOSSES :5
"! IS A W9D-UP4 ,SUBSEC;N #HH7#A.B7 HAS
BE5 AM5D$ 9 ! SAME MANN] Z           #FD
             ,,IT-#CJB;,R#C         B#BG
SUBSEC;N #HH7#A.A74 ,AN ELEC;N IS AL
AVAILA# 9 P>AGRAPH #HH7#A.B77D7 6ALL[ !
P>5T -PANY 6A3ESS C]TA9 NON-CAPITAL
LOSSES (! SUBSIDI>Y -PANY "O YE> E>LI]
?AN O!RWISE WD H BE5 POSSI#4
  ,! 4CUS.NS 9 =M] P>AGRAPHS #B1 #C1 #G1
#I1 #AJ1 #AB1 #AD1 #AG1 #AH & #BC D N
APPLY 6? BULLET91 & H N BE5 C>RI$ =W>D4
  ,P>AGRAPHS #AJ1 #AB1 #AE1 #CB1 #CD1
#CE1 #CF &! ,APP5DIX 7=M] P>AGRAPHS #E1
#F1 #AC1 #BF1 #BD1 #BE1 #BG & #BH
RESPECTIVELY7 MAY 9CLUDE ^W+ *ANGES
6IMPROVE CL>;Y OR REFLECT M9OR
LEGISLATIVE AM5D;TS4









                                     #FE