,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,numb]3 ,,it-#cje;,r#d
,subject3 ,9come ,tax ,act--,te/a;t>y
  ,sp\se ,tru/s
,date3 ,octob] #cj1 #aiif
,ref];e3 ,subsec;ns #gj7#f71 7#f.a71
  7#g7 & 7#h7 7al subsec;ns #ab7#aj.b71
  #gj7#e71 7#e.d7 & 7#f.b71 #ajh7#c7 &
  7#d71 #bdh7#c71 7#h71 7#i71 7#i.a7 &
  7#i.b7 & #beb7#c7 & 7#d7 & p>agraph #e
  ( ,>ticle ,,xxixb (! ,canada-,unit$
  ,/ates ,9come ,tax ,3v5;n 7#aihj77

               ,applic,n
    
  ,? bullet9 replaces & c.els ,9t]pret,n
,bullet9 ,,it-#cje;,r#c1 ,e/abli%;t (
,te/a;t>y ,sp\se ,tru/1 dat$ ,june #bi1
#aihg4 ,x al 9corporates relevant -;ts f
,9t]pret,n ,bullet9 ,,it-#bjg;,r1
                                      #a
             ,,it-#cje;,r#d          a#a
8,ta9t$0 ,sp\se ,tru/s1 dat$ ,m>* #bf1
#aigi & c.els t bullet94

                ,summ>y
    
  ,! purpose ( subsec;n #gj7#f7 is 6all[
a def]ral (! tax 3sequ;es t wd o!rwise
>ise f ! deem$ 4posi;ns ( capital
prop]ty o3urr+ z a result (a taxpay]'s
d1?1 if ! prop]ty is transf]r$ or
4tribut$ 6! taxpay]'s sp\se or 6a
te/a;t>y tru/ e/abli%$ 9 fav\r (! sp\se
&! o!r require;ts ( t provi.n >e met4
  ,? bullet9 4cusses ! 3di;ns : m/ 2 met
=a tru/ 6qualify z a sp\se tru/ describ$
9 subsec;n #gj7#f7 &! situ,ns "u : s* a
tru/ 2comes 8ta9t$40 ,x al 4cusses ! tax
implic,ns (a ta9t$ sp\se tru/ & h[1 if
at all1 a ta9t$ sp\se tru/ c 2
8unta9t$40 ,f9,y1 ! bullet9 4cusses a
simil> def]ral1 "u subsec;n #gj7#f.a71 (
:at wd o!rwise 2 ! tax 3sequ;es (! deem$
pay;ts \ (a ,,nisa ,fund ,no4 #b o3urr+
z a result ( d1?4                     #b
          ,4cus.n & ,9t]pret,n       b#a
    
        ,g5]al 7p>agraphs #a-d7
    
#a4 ,taxa# capital ga9s1 all[a# capital
  losses1 recaptures ( capital co/
  all[.e & t]m9al losses : wd o!rwise
  >ise z a result (a taxpay]'s d1?1
  0virtue (! deem$ 4posi;n ( capital
  prop]ty "u subsec;n #gj7#e71 >e g5],y
  def]r$ if1 z a 3sequ;e (! taxpay]'s
  d1? 7see #i 6#ab 2l71 ! prop]ty is
  transf]r$ or 4tribut$ 6! taxpay]'s
  sp\se or 6a tru/ e/abli%$ 9 fav\r (!
  taxpay]'s sp\se z describ$ 9 subsec;n
  #gj7#f7 7a 8sp\se tru/074
#b4 ,:5 subsec;n #gj7#f7 applies1 !
  sp\se or sp\se tru/ : acquires a
  capital prop]ty z a 3sequ;e (!
  taxpay]'s d1? g5],y assumes !
  taxpay]'s tax co/ (! prop]ty4 ,? am.t
  is al ! dec1s$'s proce$s ( 4posi;n (!
  prop]ty4 ,! dec1s$ taxpay]'s legal
  repres5tative may1 h["e1 elect "u
  subsec;n #gj7#f.b7 6h subsec;n      #c
             ,,it-#cje;,r#d          c#a
  #gj7#e71 r ?an subsec;n #gj7#f71 apply
  6any capital prop]ty (! taxpay]4 ,9 ^!
  circum/.es1 ! proce$s ( 4posi;n (!
  prop]ty 6! dec1s$ & xs co/ 6! sp\se or
  sp\se tru/ >e ea* equal 6! fair m>ket
  value (! prop]ty immly 2f d1?4 ,an
  elec;n made "u subsec;n #gj7#f.b7 m/ 2
  made 9 ! dec1s$'s regul> 9come tax
  return =! ye> ( d1?4
#c4 ,:5 a "pn]%ip 9t]e/ (a dec1s$
  taxpay] is transf]r$ or 4tribut$ 6!
  taxpay]'s sp\se or 6a sp\se tru/1 z
  describ$ 9 subsec;n #gj7#f71 &!
  taxpay]'s adju/$ co/ base (! 9t]e/ 0
  negative immly 2f d1?1 subsec;n
  #gj7#f7 may n result 9 a -plete tax-
  def]r$ transf] or 4tribu;n4 ,= m
  9=m,n1 see ! curr5t v].n ( ,,it-#bgh1
  ,d1? (a ,"pn] or (a ,retir$ ,"pn]4
#d4 ,0virtue ( subsec;n #beb7#c71 a
  taxpay]'s sp\se 9cludes1 = purposes (
  subsec;n #gj7#f71 an 9dividual (!
  opposite sex :o is "py 6a voida# or
  void m>riage )! taxpay]4            #d
             ,,it-#cje;,r#d          d#a
  ,fur!rmore1 subsec;n #beb7#d7 ext5ds !
  m1n+ ( sp\se1 = purposes (! ,act1
  69clude :at is g5],y ref]r$ 6z a
  8-mon-law sp\se40

     ,e/abli%;t ( ,te/a;t>y ,sp\se
         ,tru/ 7p>agraphs #f-h7
    
#e4 ,a sp\se tru/1 z describ$ 9 subsec;n
  #gj7#f71 is cr1t$ 0a taxpay]'s w 7see
  #aa & #ab 2l7 & m/ 5title ! sp\se 6rcv
  all ! 9come (! tru/ >is+ 2f ! sp\se's
  d1?4 ,fur!rmore1 no "o b ! sp\se may
  rcv or o!rwise obta9 ! use ( any (!
  tru/'s 9come or capital 2f ! sp\se's
  d1? 7see al #ac 6#af 2l74 ,= subsec;n
  #gj7#f7 6apply1 ! capital prop]ty
  transf]r$ or 4tribut$ 6! sp\se or
  sp\se tru/ m/ ve/ 9def1sibly 9 ! sp\se
  or sp\se tru/ )9 #cf mon?s (!
  taxpay]'s d1? or1 ^u writt5 applic,n
  6! ,m9i/] )9 t p]iod1 )9 s* l;g] p]iod
  z ! ,m9i/] 3sid]s r1sona# 9 !
  circum/.es4 ,9 a4i;n1 0virtue (     #e
             ,,it-#cje;,r#d          e#a
  subsec;n #bdh7#i.b71 ! prop]ty m/ ve/
  9def1sibly 9 ! sp\se or sp\se tru/ 2f
--------------------------------------#b
  ! sp\se's d1?4 ,= 9=m,n on ! t]m 8ve/
  9def1sibly10 see ! curr5t v].n (
  ,,it-#ddi1 ,m1n+ ( 8,ve/$
  ,9def1sibly40
#f4 ,=a te/a;t>y tru/ 6qualify z a sp\se
  tru/ "u subsec;n #gj7#f71 ! dec1s$ m/
  h be5 resid5t 9 ,canada immly 2f d1?
  &! tru/ cr1t$ 0! dec1s$'s w m/ 2
  resid5t 9 ,canada immly af ! "t !
  prop]ty ve/$ 9def1sibly 9 ! tru/4
#g4 ,an executor may h ! 4cre;n z 6:
  prop]ties >e 6be transf]r$ 6! sp\se
  tru/ )! w specify+ only ! total value
  (! prop]ty or por;n (! e/ate 6be s
  transf]r$4 ,! w may al provide =!
  e/abli%;t ( m ?an "o tru/ 7= example1
  a sp\se tru/ &a family tru/7 & specify
  ! total value ( prop]ty 6be transf]r$
  6ea* tru/ :ile l1v+ 6! executor's
  4cre;n ! selec;n ( specific prop]ty
  6be transf]r$ 6ea* tru/4 ,9 o!r     #f
             ,,it-#cje;,r#d          a#b
  9/.es1 ! w may direct ! e/abli%;t &
  t]ms (a sp\se tru/ b l1ve total 4cre;n
  6! executor 6select bo? ! total value
  (& prop]ty 6be transf]r$ 6! tru/4 ,9 !
  abs;e ( any express direc;ns 9 ! w1 !
  executor is gov]n$ 0! law (! relevant
  jurisdic;n 9 allocat+ ! prop]ty (!
  e/ate 6! v>i\s b5efici>ies & tru/s4
  ,^! k9ds ( >range;ts d n 4qualify a
  tru/ o!rwise qualify+ z a sp\se tru/4
#h4 ,once a tru/ qualifies z a sp\se
  tru/ "u ! t]ms ( subsec;n #gj7#f71 x
  rema9s a sp\se tru/ & is subject 6!
  provi.ns a6ect+ s* tru/s 7= example1
  p>agraph #ajd7#d77a77 ev5 if xs t]ms
  >e v>i$ 0agree;t1 legal ac;n or br1* (
  tru/4 ,h["e1 ^! ev5ts may cause o!r
  provi.ns (! ,act 6apply1 s* z p>agraph
  #ajd7#f77b7 & subsec;ns #ajf7#b7 &
  #ajg7#d74



                                      #g
       ,transf] or ,4tribu;n z a     b#b
     ,3sequ;e ( ,d1? & ,tru/ ,cr1t$
         0,w 7p>agraphs #i-ab7
    
#i4 ,0virtue ( subsec;n #bdh7#h71 a
  prop]ty is 3sid]$ 6h be5 transf]r$ or
  4tribut$ to1 & acquir$ by1 a sp\se or
  sp\se tru/ z a 3sequ;e (a taxpay]'s
  d1? :5 ! transf]1 4tribu;n or
  acquisi;n was3
  7a7 "u1 or z a 3sequ;e (1 ! t]ms (! w
    or o!r te/a;t>y 9/ru;t (! taxpay]1
  7b7 z a 3sequ;e (! law gov]n+ !
    9te/acy (! taxpay]1 or
  7c7 z a 3sequ;e (a 4claim]1 rel1se or
    surr5d] 7see #aj 2l7 0a b5efici>y "u
    ! w or o!r te/a;t>y 9/ru;t or on !
    9te/acy (! taxpay]4
#aj4 ,subsec;n #bdh7#i7 describes
  84claim]0 & 8rel1se or surr5d]0 =!
  purposes ( subsec;n #bdh7#h74 ,a
  4claim] 9volves an \t"r refusal 6a3ept
  a gift1 %>e or 9t]e/ "u a w1 ) no
  /ipul,n z 6h[ ! taxpay]'s legal
  repres5tatives %d 4tribute !        #h
             ,,it-#cje;,r#d          c#b
  4claim$ prop]ty4 ,a 4claim] ( prop]ty
  9 fav\r ( ano!r p]son is n a true
  4claim] b an assign;t4 ,h["e1 :5 s* a
  4claim] or assign;t wd a*ieve ! same
  e6ect z a simple 4claim] )\t any
  assign;t1 a 4claim] is 3sid]$ 6h be5
  made =! purposes ( subsec;n #gj7#f74
  ,9 ,quebec a 4claim] 9cludes a
  renunci,n (a su3es.n made "u ! laws (
  t prov9ce t is n made 9 fav\r ( any
  p]son4 ,= subsec;n #gj7#f7 6apply1 a
  4claim] m/ 2 made )9 #cf mon?s (!
  taxpay]'s d1? or1 ^u writt5 applic,n
  6! ,m9i/] )9 t p]iod1 )9 s* l;g] p]iod
  z ! ,m9i/] 3sid]s r1sona# 9 !
  circum/.es4

  ,a rel1se or surr5d] made "u ! laws (a
  prov9ce 7o!r ?an ! ,prov9ce ( ,quebec7
  m/ n 2 9 fav\r (a "picul> p]son4 ,=!
  ,prov9ce ( ,quebec1 a rel1se or
  surr5d] m1ns an 9t] vivos gift ( an
  9t]e/ in1 or "r 6prop]ty (1 a su3es.n
  made 6! p]son :o wd h b5efit$ _h    #i
             ,,it-#cje;,r#d          d#b
  ! donor ren\nc$ ! su3es.n b n 9 fav\r
  ( any"o4 ,a rel1se or surr5d]1 :e!r
  made )9 ! ,prov9ce ( ,quebec or
  o!rwise1 m/ 2 made )9 ! same "t z a
  4claim] is made1 z describ$ abv4
#aa4 ,9 rel,n 6! ,prov9ce ( ,quebec1
  subsec;n #bdh7#c7 deems
  7a7 a usufruct1
  7b7 a "r ( use or habit,n1 or
  7c7 a sub/itu;n1
  
  6be a tru/4 ,! tru/ is deem$ 6be cr1t$
  0w ": 7a71 7b7 or 7c7 0 e/abli%$ 0w4
  ,! prop]ty subject to 7a71 7b7 or 7c7
  is deem$ 6h be5 transf]r$ 6& held 0a
  tru/4 ,fur!rmore1 ! transf] is deem$
  6h o3urr$ on1 & z a 3sequ;e (1 ! d1?
  (! te/ator :5 7a71 7b7 or 7c7 >ises on
  ! d1? ( t p]son4 ,= m 9=m,n on
  subsec;n #bdh7#c71 see ! curr5t v].n (
  ,,it-#dcg1 ,[n]%ip ( ,prop]ty
  7,pr9cipal ,resid;e74
#ab4 ,:e!r or n a tru/ 0 cr1t$ 0a
  taxpay]'s w1 subsec;n #bdh7#i.a7   #aj
             ,,it-#cje;,r#d          e#b
  recognizes t a qualify+ sp\se tru/ may
  2 e/abli%$ 0a c\rt ord]1 9 rel,n 6!
  taxpay]'s e/ate1 made "u any law (a
  prov9ce t provides =! relief or
  support ( dep5dants4 ,a simil> result
  may n 2 a*iev$ 0a v>i,n made 0agree;t
  am;g ! b5efici>ies1 ev5 "u v>i,n (
  tru/s legisl,n s9ce s* a tru/ is n
  cr1t$ z a 3sequ;e ( d1? )9 ! m1n+ (
  subsec;n #bdh7#h74

     ,require;ts reg>d+ ! ,9come &
        ,capital (a ,sp\se ,tru/
           7p>agraphs #ac-af7
    
#ac4 ,z 9dicat$ 9 #e abv1 6qualify z a
  sp\se tru/1 ! sp\se m/ 2 5titl$ 6rcv
  all ! 9come (! tru/ >is+ 2f ! sp\se's
  d1? & no "o b ! sp\se may rcv or
  o!rwise obta9 ! use ( any (! 9come or
  capital (! tru/ 2f ! sp\se's d1?4 ,= ?
--------------------------------------#c
  purpose1 subsec;n #ajh7#c7 provides t
  ! 9come (! tru/ is xs 9come        #aa
             ,,it-#cje;,r#d          a#c
  calculat$ "u tru/ rules 7r ?an 9
  a3ord.e )! ,act7 less any divid5ds
  9clud$ "!93
  7a7 t >e n 9clud$ 9 -put+ ! tru/'s
    9come1 = o!r purposes (! ,act1
    0r1son ( sec;n #hc1
  7b7 t >e describ$ 9 subsec;n #aca7#a71
    or
  7c7 6: subsec;n #aca7#a7 applies
    0r1son ( subsec;n #acj7#b74
  
  ,3sequ5tly1 a tru/ w n 2 preclud$ f
  qualify+ z a sp\se tru/ 2c (! fact t1
  "u ! t]ms (! tru/1 s* divid5ds >e n pd
  or paya# 6! sp\se4 ,al1 am.ts s* z
  taxa# capital ga9s 7t >e n 9 ! nature
  ( 9come "u tru/ rules7 : 7 nei pd nor
  paya# 6! sp\se "u ! t]ms (! tru/1 nor
  9clud$ 9 ! sp\se's 9come "u a pref]r$
  b5efici>y elec;n1 >e necess>ily tax$ 9
  ! tru/1 s9ce dur+ ! sp\se's life"t no
  "o b ! sp\se may rcv any?+ \ (a
  qualify+ sp\se tru/ or make a pref]r$
                                     #ab
             ,,it-#cje;,r#d          b#c
  b5efici>y elec;n 9 3nec;n )! tru/'s
  9come4
#ad4 ,"u subsec;n #ajh7#d71 a tru/ is n
  prev5t$ f qualify+ z a sp\se tru/
  solely 2c x is *>g$ )! pay;t (
  7a7 any 9come or pr(its tax on any (
    xs 9come -put$ 9 a3ord.e )! ,act1 or
  7b7 any e/ate1 legacy1 su3es.n or
    9h]it.e duty paya# 9 3sequ;e (!
    te/ator's d1? on any prop]ty (! tru/
    or any 9come or capital 9t]e/ 9 x4
#ae4 ,9 9t]pret+ ! require;t t ! sp\se
  m/ 2 5titl$ 6rcv all (! 9come (! tru/
  t >ises 2f ! sp\se's d1?1 ! doctr9e (
  3/ructive receipt is appli$4
  ,3sequ5tly1 ! pay;t ac 6! w (1 or !
  provi.n 9 ! w =! pay;t (1 any 9come (!
  tru/ 6a p]son o!r ?an ! sp\se1 on !
  3di;n t x 2 us$ solely =! b5efit (!
  sp\se1 does n 4qualify an o!rwise
  qualify+ sp\se tru/4
#af4 ,9 9t]pret+ ! require;t t no p]son
  except ! sp\se may1 2f ! sp\se's d1?1
  rcv or o!rwise obta9 ! use ( any   #ac
             ,,it-#cje;,r#d          c#c
  (! 9come or capital (! tru/1 ! r5t+ (
  r1l e/ate at m>ket value or ! l5d+ (
  m"oy on -m]cial t]ms 79clud+ m>ket
  rates ( 9t]e/1 appropriate securities
  &a r1sona# repay;t s*$ule71 does n
  g5],y m1n t ! p]son r5t+ ! r1l e/ate
  or borr[+ ! m"oy has rcvd or has ! use
  ( t prop]ty z ! t]m is us$ 9 ?
  require;t4

         8,ta9t$0 ,sp\se ,tru/
           7p>agraphs #ag-bj7
    
#ag4 ,a tru/ cr1t$ 0a taxpay]'s w 9
  fav\r (a sp\se t does n meet !
  qualific,ns (a sp\se tru/ set \ 9
  subsec;n #gj7#f7 is -monly ref]r$ 6z a
  8ta9t$0 sp\se tru/4 ,"o cause (a sp\se
  tru/ 2+ ta9t$ is a direc;n 9 ! w 6pay
  \ (! tru/ v>i\s debts1 oblig,ns or d1?
  duties1 o!r ?an ^? 6: subsec;n
  #ajh7#d7 applies 7see #ad abv74
#ah4 ,subsec;n #gj7#g7 provides a me?od
  = unta9t+ "s types ( ta9t$ sp\se   #ad
             ,,it-#cje;,r#d          d#c
  tru/s1 ?us p]mitt+ ! rollov] provid$
  0subsec;n #gj7#f74 ,? is possi# :5 !
  debts1 oblig,ns & d1? duties ref]r$
  6in #ag abv >e 8te/a;t>y debts0 &!
  tru/ o!rwise qualifies z a sp\se tru/4
  ,! t]m 8te/a;t>y debt10 : is def9$ 9
  p>agraph #gj7#h77c71 m1ns3
  7a7 any debt (! taxpay]1 or any o!r
    oblig,n (! taxpay] 6pay an am.t1 t 0
    \t/&+ immly 2f 8 or h] d1?1 &
  7b7 any am.t paya# 0! e/ate 9 3sequ;e
    (! taxpay]'s d1?1 o!r ?an any am.t
    paya# 6any p]son z a b5efici>y (!
    e/ate1
  
  9clud+ 9come or pr(its tax paya# 0or
  =! taxpay] =! tax,n ye> 9 : he or %e
  di$ &= any previ\s tax,n ye>1 & any
  e/ate1 legacy1 su3es.n or 9h]it.e duty
  paya# 9 3sequ;e (! taxpay]'s d1?4

  ,te/a;t>y debts al 9clude fun]al &
  te/a;t>y exp5ses & -p5s,n
  6repres5tatives = c>ry+ \ ^?       #ae
             ,,it-#cje;,r#d          e#c
  duties : >e norm,y ex]cis$ 0an
  executor or adm9i/rator1 t is1 up 6!
  po9t ! e/ate prop]ties >e transf]r$ or
  4tribut$ 6! b5efici>ies or 6! tru/ee
  (! ta9t$ sp\se tru/ or any o!r tru/
  >is+ on d1?4
#ai4 ,a tru/ =! b5efit (a sp\se is ta9t$
  9 a mann] t _c 2 rem$i$ 0! me?od
  provid$ 9 subsec;n #gj7#g7 if c]ta9
  types ( oblig,ns >e 6be met \ ( xs
  prop]ty 2f ! d1? (! sp\se4 ,examples (
  s* oblig,ns 9clude3
  7a7 a 3t+5t liabil;y 6make gd any
    defici5cy t may >ise 9 ano!r tru/
    cr1t$ "u ! same w1
  7b7 a liabil;y =! pay;t ( tru/ee fees
    applica# 6o!r tru/s "u ! w1
  7c7 an oblig,n 6pay a 2que/ 6ano!r
    b5efici>y \ (! prop]ty (! e/ate t is
    held 0! sp\se tru/1 &
  7d7 a rem>riage clause :1 if ! sp\se
    rem>ries1 wd result 9 "s"o o!r ?an !
    sp\se 2+ 5titl$ 69come or capital (!
    tru/ 2f ! sp\se's d1?4           #af
             ,,it-#cje;,r#d          f#c
  ,! tru/ is n ta9t$ 9 ? mann]1 h["e1 if
  ! debt or oblig,n 6be met is3

  7e7 a te/a;t>y debt 7see #ah abv71
  7f7 a debt or oblig,n 6! sp\se1
  7g7 a debt or oblig,n 9curr$ =! b5efit
    (! sp\se1 or
  7h7 an oblig,n 6pay fees 6! tru/ee =!
    adm9i/r,n (! sp\se tru/4
--------------------------------------#d
#bj4 ,9 g5]al t]ms1 ! me?od provid$ 9
  subsec;n #gj7#g7 6unta9t a ta9t$ sp\se
  tru/ t is capa# ( 2+ unta9t$ is 6total
  all te/a;t>y debts (! tru/ & deduct3
  7a7 any e/ate1 legacy1 su3es.n or
    9h]it.e duty paya#1 9 3sequ;e (!
    taxpay]'s d1?1 = any prop]ty (!
    tru/1 or = any 9t]e/ 9 ! tru/ 7note
    t ^! am.ts d n ta9t a sp\se tru/ z
    expla9$ 9 #ad abv71 &
  7b7 any debt secur$ 0a mortgage on
    prop]ty [n$ 0! taxpay] immly 2f 8 or
    h] d1?4
                                     #ag
             ,,it-#cje;,r#d          a#d
  ,! rema9+ debts >e ref]r$ 6in p>agraph
  #gj7#h77b7 z non-qualify+ debts4 ,9 !
  dec1s$ taxpay]'s regul> 9come tax
  return =! ye> ( d1? 7t is1 n a return
  fil$ "u subsec;n #gj7#b71 #ajd7#bc7 or
  #aej7#d71 or p>agraph #abh7#b77e771 !
  taxpay]'s legal repres5tative m/ elect
  6h ! tru/ tr1t$ z a sp\se tru/ & li/
  "o or m prop]ties (! tru/ 7o!r ?an a
  net 9come /abiliz,n a3.t7 hav+ a total
  fair m>ket value immly af ! taxpay]'s
  d1? at l1/ equal 6! total (! non-
  qualify+ debts4 ,! li/ may 9clude m"oy
  & if x al"o is su6ici5t 6cov] ! non-
  qualify+ debts1 no o!r prop]ties ne$ 2
  li/$4 ,! tru/ is !n deem$ 6be a sp\se
  tru/ & capital prop]ties li/$ ag/ !
  non-qualify+ debts >e deem$ 6h be5
  4pos$ (1 0virtue ( subsec;n #gj7#e71
  at fair m>ket value immly 2f !
  taxpay]'s d1?4 ,z a result1 any ga9s1
  9come or losses >is+ f s* deem$
  4posi;ns >e 9clud$ 9 -put+ ! dec1s$'s
  9come4 ,! o!r capital prop]ties    #ah
             ,,it-#cje;,r#d          b#d
  transf]r$ 6! sp\se tru/ qualify =!
  rollov] provid$ 9 subsec;n #gj7#f74 ,!
  foll[+ example illu/rates h[ a ta9t$
  sp\se tru/ may 2 unta9t$3

  ,te/a;t>y debts
,9come tax [+ 0!
  dec1s$ """""""""""" 4#aj1jjj
,busi;s debt (!
  dec1s$ """""""""""" 4#be1jjj
,mortgage on a"p;t
  build+ """""""""""" 4#hj1jjj
,mortgage on l& """"" 4#aj1jjj
,te/a;t>y & fun]al
  exp5ses """""""""""" 4#a1jjj 4#abf1jjj

  ,6det]m9e non-qualify+ debts1 deduct3
,mortgage on a"p;t
  build+ """""""""""" 4#hj1jjj
,mortgage on l& """"" 4#aj1jjj  4#ij1jjj
.,non-qualify+
  .debts """""""""""""""""""""" 4#cf1jjj

                                     #ai
             ,,it-#cje;,r#d          c#d
  ,! executor !n li/s prop]ties (! ta9t$
  sp\se tru/ hav+ a total fair m>ket
  value immly af d1? at l1/ equal 6^!
  non-qualify+ debts4 ,= ? purpose1
  p>agraph #gj7#h77a7 def9es ! fair
  m>ket value (a prop]ty z ! am.t1 if
  any1 0: xs fair m>ket value o!rwise
  det]m9$ exce$s ! am.t ( any debt
  secur$ 0a mortgage on ! prop]ty4

  ,li/$ prop]ty3
.,%>es--,fair m>ket
  value """""""""""""""""""""""" 4#i1jjj
.,l&--,fair m>ket
  value """""""""""""" 4#da1jjj
,less3 ,mortgage on
  ! l& """"""""""""""" 4#aj1jjj
,net fair m>ket
  value (! l& """"""""""""""""" 4#ca1jjj
,net fair m>ket
  value ( li/$
  prop]ty """"""""""""""""""""" 4#dj1jjj

                                     #bj
             ,,it-#cje;,r#d          d#d
  ,capital ga9 or
    loss3
.,%>es--,fair m>ket
  value """"""""""""""" 4#i1jjj
,adju/$ co/ base 6!
  dec1s$ """""""""""""" 4#f1jjj
,capital ga9 """"""""""""""""""" 4#c1jjj
.,l&--,fair m>ket
  value """""""""""""" 4#da1jjj
,adju/$ co/ base 6!
  dec1s$ """"""""""""" 4#cj1jjj
,capital ga9 """""""""""""""""" 4#aa1jjj

  ,! deem$ 4posi;n rules 9 subsec;n
  #gj7#e7 apply 6! capital prop]ties s
  li/$ &1 9 ? example1 ! total capital
  ga9 2f any reduc;n "u subp>agraph
  #gj7#g77b77;iii7 7see #ba 2l7 is
  4#ad1jjj 74#c1jjj plus 4#aa1jjj74
#ba4 ,:5 ! fair m>ket value ( all !
  prop]ties li/$ exce$s ! total non-
  qualify+ debts 7? excess is ref]r$ 6z
  ! 8li/$ value excess07 &! taxpay]'s
  legal repres5tative designates     #ba
             ,,it-#cje;,r#d          e#d
  ."o capital prop]ty s li/$ 7o!r ?an
  m"oy & deprecia# prop]ty7 9 !
  taxpay]'s return1 ! capital ga9 or
  loss on t prop]ty 7f ! deem$ 4posi;n
  "u subsec;n #gj7#e77 w 2 reduc$ z a
  result (! =mula 9 subp>agraph
  #gj7#g77b77;iii74 ,"u subp>agraph
  #gj7#g77b77;iii71 ! capital ga9 or
  loss on ! prop]ty is3

  ,capital ga9 or loss o!rwise det]m9$
  multipli$ 0,fair m>ket value (! "o
  prop]ty m9us ! li/$ value excess
  divid$ 0,fair m>ket value (! "o
  prop]ty immly af d1?

#bb4 ,! foll[+ examples illu/rate !
  applic,n (! rule 9 subp>agraph
  #gj7#g77b77;iii74

,example #a3
  ,! li/$ value excess 9 ! example 9 #bj
  abv is 4#d1jjj 74#dj1jjj m9us
  4#cf1jjj74 ,9 t example1 assume    #bb
             ,,it-#cje;,r#d          f#d
  t ! legal repres5tative has designat$
  ! %>es t h be5 li/$4 ,pursuant
  6subp>agraph #gj7#g77b77;iii71 !
  capital ga9 on ! %>es is calculat$ z
  foll[s3

  4#c1jjj multipli$ by 74#i1jjj m9us
  4#d1jjj7 divid$ 04#i1jjj equals
  4#a1ffg

  ,"!=e1 ! total capital ga9 6be 9clud$
  9 ! dec1s$'s 9come is 4#ab1ffg
  74#a1ffg plus 4#aa1jjj74 ,! adju/$ co/
  base (! two prop]ties 6! sp\se tru/
  is3 l& 4#da1jjj 70virtue ( p>agraph
  #gj7#e77b77 & %>es 4#g1ffg 74#f1jjj
  plus 4#a1ffg1 0virtue ( clause
  #gj7#g77b77;iv77,a774
--------------------------------------#e
,example #b3
  ,same z example #a abv2 h["e1 assume t
  ! adju/$ co/ base (! %>es is 4#af1jjj
  & t1 3sequ5tly1 ! %>es o!rwise result
  9 a capital loss ( 4#g1jjj         #bc
             ,,it-#cje;,r#d          a#e
  74#i1jjj m9us 4#af1jjj74 ,! capital
  loss calculat$ 9 a3ord.e ) subp>agraph
  #gj7#g77b77;iii7 is3

  4#g1jjj multipli$ by 74#i1jjj m9us
  4#d1jjj7 divid$ 04#i1jjj equals
  4#c1hhi

  ,"!=e1 ! net capital ga9 f ! l& & %>es
  is 4#g1aaa 74#aa1jjj m9us 4#c1hhi74 ,!
  adju/$ co/ base (! two prop]ties 6!
  sp\se tru/ is3 l& 4#da1jjj 70virtue (
  p>agraph #gj7#e77b77 & %>es 4#ab1aaa
  74#af1jjj m9us 4#c1hhi1 0virtue (
  clause #gj7#g77b77;iv77,b774
#bc4 ,": non-qualify+ debts 9clude 9come
  tax paya# 0! dec1s$'s repres5tative =!
  9come tax return =! ye> ( d1?1 ! am.t
  paya# is calculat$ af giv+ e6ect 6!
  provi.ns ( p>agraph #gj7#g77b74 ,x is
  "!=e nec 63sid] ! e6ect t ! li/+ (a
  "picul> prop]ty w h on ! am.t ( tax
  paya#4 ,! adju/;t (a capital ga9 or
  loss on a designat$ prop]ty        #bd
             ,,it-#cje;,r#d          b#e
  pursuant 6subp>agraph #gj7#g77b77;iii7
  may al h a significant e6ect 9 "s
  circum/.es4 ,:5 ! am.t (! tax liabil;y
  is a critical factor 9 ! selec;n (
  prop]ties 6be li/$ 7or ! prop]ty 6be
  designat$71 m ?an "o no;nal tax
  calcul,n may 2 nec4
#bd4 ,! legal repres5tative is n oblig$
  64pose (! li/$ prop]ties (! tru/
  6obta9 ! funds 6pay ! non-qualify+
  debts4 ,!y may 2 pd f any availa#
  s\rce ( funds4
#be4 ,! legal repres5tative is responsi#
  = calculat+ ! non-qualify+ debts &!
  fair m>ket value ( li/$ prop]ties z
  a3urately z possi# f ! facts availa#4
  ,:5 ^! calcul,ns >e subsequ5tly
  det]m9$ 6be 9correct1 despite !
  r1sona# ef=ts (! legal repres5tative1
  &! value (! li/$ prop]ties is actu,y
  less ?an ! total (! non-qualify+
  debts1 we w p]mit a4i;nal prop]ties
  6be li/$ at t lat] "t 9 ord] t !
  provi.ns ( subsec;n #gj7#f7 may    #be
             ,,it-#cje;,r#d          c#e
  / apply 6! prop]ties (! tru/ t >e n
  li/$4
#bf4 ,x is >gua# t a tru/ 9 fav\r (a
  sp\se cr1t$ "u a taxpay]'s w \ (!
  residue ( 8 or h] e/ate is ta9t$ 0!
  4tribu;ns & pay;ts nec 6e/abli% ! tru/
  corpus4 ,"u ? 9t]pret,n1 x is nec
  6foll[ ! proc$ures set \ 9 subsec;n
  #gj7#g7 :5 x is 9t5d$ t ! tru/ qualify
  z a sp\se tru/ "u subsec;n #gj7#f74
  ,ano!r view is t subsec;n #gj7#f7
  applies 6s* (! orig9al prop]ties (!
  e/ate z >e reta9$ 6=m a "p (! tru/
  corpus )\t ! necess;y ( foll[+ !
  proc$ures describ$ 9 subsec;n #gj7#g74
  ,ei 9t]pret,n is a3epta# )! result t a
  tru/ee has ! foll[+ op;ns availa# :5
  an o!rwise qualify+ sp\se tru/ is
  cr1t$ \ (! residue ( an e/ate3
  7a7 ,! tru/ee may *oose 6h ! provi.ns
    ( subsec;n #gj7#e7 apply 6all (!
    capital prop]ties (! e/ate4
  7b7 ,0foll[+ ! proc$ures describ$ 9
    subsec;n #gj7#g71 ! rules 9      #bf
             ,,it-#cje;,r#d          d#e
    subsec;n #gj7#f7 w apply 6^? capital
    prop]ties (! sp\se tru/ t >e n li/$
    &! rules 9 subsec;n #gj7#e7 w apply
    6li/$ prop]ties (! e/ate1 subject
    6adju/;t = any 8li/$ value excess0
    7see #ba abv74
  7c7 ,! tru/ee may *oose 6h subsec;n
    #gj7#e7 apply 6all (! capital
    prop]ties (! e/ate t >e 4tribut$ or
    o!rwise 4pos$ ( 2f ! corpus (! sp\se
    tru/ is e/abli%$ & h subsec;n
    #gj7#f7 apply 6s* (! orig9al capital
    prop]ties (! e/ate z >e reta9$ z !
    prop]ty (! tru/4 ,! fact t1 prior 6!
    9def1si# ve/+ (! prop]ties 9 ! tru/1
    9come deriv$ f ^! prop]ties is us$
    0! e/ate 6pay specific 2que/s or
    te/a;t>y debts does n preclude !
    tru/ f qualify+ z a sp\se tru/4
  
  ,! "r 6elect "u subsec;n #gj7#f.b7
  7ref]r$ 6in #b abv7 is una6ect$ 0!
  adop;n ( ei op;n 7b7 or op;n 7c74
                                     #bg
             ,,it-#cje;,r#d          e#e
#bg4 ,al? ! tr1t;t = tax purposes
  applica# 6! acquisi;n ( li/$ prop]ties
  0a tru/ di6]s f t applica# 6!
  acquisi;n (! bal.e (! tru/ prop]ties1
  li/$ prop]ties >e1 n"e!.s1 prop]ties
  (a sp\se tru/ & subject 6! special
  rules relat+ 6sp\se tru/s f.d else": 9
  ! ,act 7= example1 ! deem$ 4posi;n (
  s* prop]ties "u p>agraph #ajd7#d77a7
  ^u ! d1? (! sp\se74
#bh4 ,:5"e a ta9t$ sp\se tru/ capa# ( 2+
  unta9t$ 0subsec;n #gj7#g7 is cr1t$1
  reg>d.s (! simultane\s cre,n "u ! w (
  o!r tru/s 6: subsec;n #gj7#g7 is
  irrelevant1 ! legal repres5tative has
  up 6#ah mon?s f ! date ( d1? 6file !
  dec1s$'s f9al 9come tax return4 ,? is
  ! case :e!r or n s* a tru/ is
  su3ess;lly unta9t$ "u p>agraph
  #gj7#g77b74 ,? ext5d$ "t = fil+ al
  applies 6special returns t may 2 fil$
  pursuant 6subsec;n #aej7#d7 & p>agraph
  #ajd7#bc77d74 ,al? ! due date = mak+
  an elec;n "u subsec;n #gj7#b71 =   #bh
             ,,it-#cje;,r#d          f#e
  "rs or ?+s (! dec1s$ at ! "t ( d1?1 is
  9directly ext5d$ if ! ext5d$ fil+ date
  ref]r$ 6abv delays ! mail+ (a notice (
  assess;t =! ye> ( d1?1 ! basic rule 7!
  lat] ( "o ye> af d1? & #ij "ds af !
  mail+ ( any notice ( assess;t =! ye> (
  d1?7 rema9s un*ang$4 ,if d1? o3urs on
  or 2f ,april #cj 9 a tax,n ye>1 !
  dec1s$'s legal repres5tative has up
  6#f mon?s f ! date ( d1? 6file !
  dec1s$'s 9come tax return = ..! immly
  prec$+ tax,n .ye>4
--------------------------------------#f
  ,o!rwise1 "! >e no ext5.ns 9 ! fil+
  require;ts = 9come tax returns ( tax,n
  ye>s prior 6! ye> ( d1?4

,note3
  ,bill ;,c-#cf 3ta9s a numb] ( 9come
  tax m1sures ann\nc$ 9 ! ,febru>y #bg1
  #aiie budget4 ,am;g o!r ?+s1 ! ,bill w
  am5d p>agraphs #aej7#a77b7 & 7d71
  applica# 6! #aiie & lat] tax,n ye>s4
  ,z a result ( ^! am5d;ts1 ! due    #bi
             ,,it-#cje;,r#d          a#f
  date = fil+ a dec1s$ p]son's 9come tax
  return may 2 ext5d$ if ! dec1s$ p]son1
  or ! dec1s$ p]son's sp\se1 c>ri$ on a
  busi;s 9 ! ye> ( d1? 7except ": !
  exp5ditures (! busi;s >e prim>ily !
  co/ or capital co/ ( 8tax %elt]s074 ,9
  s* circum/.es1 ! due date = fil+ !
  return is3
    --on or 2f ,june #ae (! ye> foll[+ !
      ye> ( d1? if ! 9dividual di$ dur+
      ! p]iod ,janu>y #a 6,decemb] #ae2
      &
    --)9 six mon?s af ! date ( d1? if !
      9dividual dies dur+ ! p]iod
      ,decemb] #af 6,decemb] #ca or dur+
      ! p]iod ,janu>y #a 6,june #ad (!
      foll[+ ye> 7t is1 2f ! 9dividual's
      fil+ due date =! previ\s ye> _h !
      9dividual n di$74
    
#bi4 ,al? ! 9come tax return =! ye> (
  d1? may 2 fil$ )9 #ah mon?s ( d1? :5"e
  a tru/ is unta9t$ 0an elec;n provid$ =
  9 subsec;n #gj7#g7 s z 6qualify    #cj
             ,,it-#cje;,r#d          b#f
  z a sp\se tru/1 9t]e/ at ! prescrib$
  rate w 2 assess$ on any unpd bal.e f !
  lat] ( six mon?s af d1? & ,april #cj
  (! ye> foll[+ d1?4

      ,transf] or ,4tribu;n ( ,net
        ,9come ,/abilis,n ,a3.t
         7,,nisa7 6,sp\se ,tru/
           7p>agraphs #cj-cb7
    
#cj4 ,! 9come : wd o!rwise >ise z a
  result (a taxpay]'s d1?1 0virtue (!
  deem$ pay;t \ (! taxpay]'s ,,nisa
  ,fund ,no4 #b "u subsec;n #gj7#e.d71
  is def]r$ if1 on or af ! d1? & z a
  3sequ;e "!(1 ! taxpay]'s ,,nisa is
  transf]r$ or 4tribut$ 6his or h] sp\se
  or 6a tru/ e/abli%$ 9 fav\r ( 8 or h]
  sp\se &! require;ts ( subsec;n
  #gj7#f.a7 >e met4 ,! require;ts
  applica# 6a sp\se tru/ 9 subsec;n
  #gj7#f.a7 >e ! same z ^? applica# 6a
  sp\se tru/ 9 subsec;n #gj7#f71 )!
  excep;n t subsec;n #gj7#f.a7       #ca
             ,,it-#cje;,r#d          c#f
  does n 3ta9 any resid5cy require;ts s*
  z ^? describ$ 9 #f abv4
#ca4 ,! dec1s$ taxpay]'s legal
  repres5tative may1 h["e1 elect "u
  subsec;n #gj7#f.b7 6h subsec;n
  #gj7#e.d71 r ?an subsec;n #gj7#f.a71
  apply 6! dec1s$'s ,,nisa ,fund ,no4
  #b4 ,if subsec;n #gj7#e.d7 applies1
  all am.ts 9 ! dec1s$'s ,,nisa ,fund
  ,no4 #b w 2 deem$ 6h be5 pd \ 6!
  dec1s$ immly 2f d1? & s* am.ts w g5],y
  2 requir$1 "u subsec;n #ab7#aj.b71 6be
  9clud$ 9 -put+ ! dec1s$'s 9come =! ye>
  ( d1?4 ,! elec;n "u subsec;n #gj7#f.b7
  m/ 2 made 9 ! regul> 9come tax return
  =! ye> ( d1?4
#cb4 ,:5 a tru/1 : wd o!rwise qualify z
  a sp\se tru/ "u subsec;n #gj7#f.a71 is
  ta9t$ z a result (! pay;t 7or provi.n
  = pay;t7 (a te/a;t>y debt 7see #ag
  6#ai abv71 subsec;n #gj7#g7 may 2 us$
  6unta9t ! tru/ 7z expla9$ 9 #bj 6#bi
  abv71 ?us p]mitt+ ! rollov] provid$ 9
  subsec;n #gj7#f.a74 ,x %d 2        #cb
             ,,it-#cje;,r#d          d#f
  not$1 h["e1 t1 z 9dicat$ 9 #bj abv1 :5
  unta9t+ ! tru/1 a ,,nisa _c 2 a li/$
  prop]ty4

      ,canada-,unit$ ,/ates ,9come
          ,tax ,3v5;n 7#aihj7
             7p>agraph #cc7
    
#cc4 ,= subsec;n #gj7#f7 6apply on !
  transf] or 4tribu;n ( prop]ty 6a
  taxpay]'s sp\se1 ! taxpay] &!
  taxpay]'s sp\se m/ 2 resid5t 9 ,canada
  immly 2f ! taxpay]'s d1? & if !
  prop]ty is 6be transf]r$ or 4tribut$
  6a sp\se tru/ cr1t$ 0! taxpay]'s w1 !
  taxpay] m/ 2 resid5t 9 ,canada immly
  2f d1? &! tru/ m/ 2 resid5t 9 ,canada
  immly af ! "t ! prop]ty ve/s 9 ! tru/4
  ,pursuant 6p>agraph #e ( ,>ticle
  ,,xxixb (! ,canada-,unit$ ,/ates
  ,9come ,tax ,3v5;n 7#aihj71 ": an
  9dividual 0 a resid5t (! ,unit$ ,/ates
  immly 2f ! 9dividual's d1?1 =!
  purposes ( subsec;n #gj7#f71 bo?   #cc
             ,,it-#cje;,r#d          e#f
  ! 9dividual &! 9dividual's sp\se >e
  deem$ 6h be5 resid5t 9 ,canada immly
  2f ! 9dividual's d1? &1 if c]ta9
  3di;ns describ$ 9 t p>agraph >e met1 a
  tru/ = t sp\se w al 2 tr1t$ z 2+
  resid5t 9 ,canada4

  ,if y h any -;ts ab matt]s 4cuss$ 9 ?
bullet91 pl1se s5d !m to3

  ,director1 ,busi;s & ,public,ns
    ,divi.n
  ,9come ,tax ,rul+s & ,9t]pret,ns
    ,directorate
  ,policy & ,legisl,n ,bran*
  ,rev5ue ,canada
  #be ,ni*olas ,/reet
  ,ottawa ,,on ,k#a;,a #j;,l#h





                                     #cd
         ,explan,n ( ,*anges =        #g
       ,9t]pret,n ,bullet9 ,,it-
       #cje;,r#d ,te/a;t>y ,sp\se
                 ,tru/s
    
               ,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
    
  ,we revis$ ! bullet9 69corporate
relevant -;ts f ,9t]pret,n ,bullet9
,,it-#bjg;,r1 8,ta9t$0 ,sp\se ,tru/s1
dat$ ,m>* #bf1 #aigi & 6c.el t bullet94
,! revis$ bullet9 al reflects am5d;ts 6!
,9come ,tax ,act 0,s4,c4 #aihh1 c4#ee
7=m]ly ,bill ;,c-#aci72 ,s4,c4 #aiia1
c4#di 7=m]ly ,bill ;,c-#ah72 ,s4,c4
#aiid1 c4#g ,s*$ule ,,viii 7,s4,c4   #ce
             ,,it-#cje;,r#d          a#g
#aiic1 c4#bd--=m]ly ,bill ;,c-#ib72 &
,s4,c4 #aiid1 c4#ba 7=m]ly ,bill
;,c-#bg74 ,a note has be5 a4$ foll[+
p>agraph #h 6describe a propos$ am5d;t
6p>agraphs #aej7#a77b7 & 7d7 3ta9$ 9
,bill ;,c-#cf 7! ,febru>y #bg1 #aiie
,f$]al ,budget74 ,except z describ$ 9 !
,note foll[+ p>agraph #h1 ! -;ts 9 !
bullet9 >e n a6ect$ 0propos$ legisl,n t
0 rel1s$ 2f ,augu/ #cj1 #aiif4

       ,legislative & o!r *anges
    
  ,! title (! bullet9 has be5 revis$
s9ce1 z 9dicat$ abv1 ! bullet9 has be5
broad5$ 69clude -;ts f ,,it-#bjg;,r4
  ,"?\t ! bullet9 we h made m9or *anges
= cl>ific,n or r1dabil;y purposes4
  ,p>agraph #c has be5 a4$ 6cl>ify t1 9
c]ta9 circum/.es1 subsec;n #gj7#f7 w n
result 9 a -plete tax-def]r$ transf] 6a
sp\se or sp\se tru/4
  ,p>agraph #d has be5 a4$ 6reflect !
,bill ;,c-#ib am5d;t 6subsec;n       #cf
             ,,it-#cje;,r#d          b#g
#beb7#c74 ,z a result ( ? am5d;t1 !
ext5d$ m1n+ ( sp\se 3ta9$ 9 subsec;n
#beb7#c7 al applies = purposes (
subsec;n #gj7#f74 ,p>agraph #d al
reflects ! ,bill ;,c-#ib am5d;t : a4$ !
ext5d$ m1n+ ( sp\se 3ta9$ 9 subsec;n
#beb7#d74
  ,p>agraph #e replaces ! second "p (
p>agraph #a ( ,,it-#cje;,r#c &! f/ s5t;e
( p>agraph #a ( ,,it-#bjg;,r4 ,! 9=m,n t
appli$ 6ye>s : >e n[ /atute-b>r$ has be5
delet$4 ,fur!rmore1 ! p>agraph ref]s
6subsec;n #bdh7#i.b7 : cl>ifies c]ta9
require;ts t h 6be met = prop]ty 62come
ve/$ 9def1sibly4
  ,p>agraph #g 7p>agraph #h (
,,it-#cje;,r#c7 a4resses ! situ,n 9 : a
w directs ! e/abli%;t & t]ms (a sp\se
tru/ b l1ves total 4cre;n 6! executor
6select bo? ! total value (& prop]ty 6be
transf]r$ 6! tru/4
  ,p>agraph #h 3ta9s ! same 9=m,n z
p>agraph #g ( ,,it-#cje;,r#c1 except t a
ref];e 6p>agraph #ajd7#f77b7 has     #cg
             ,,it-#cje;,r#d          c#g
be5 a4$ 6! la/ s5t;e4 ,? ref];e has
2come relevant z a result ( am5d;ts
6p>agraph #ajd7#f77b7 9 ,bill ;,c-#ib4
  ,p>agraph #aa has be5 a4$ 6reflect
subsec;n #bdh7#c74 ,z a result ( ?
provi.n1 prop]ty subject 6c]ta9 types (
legal rel,n%ips 9 ! ,prov9ce ( ,quebec
7a civil law jurisdic;n7 may 2 eligi# =!
rollov] 6a sp\se tru/ provid$ 9 subsec;n
#gj7#f74
  ,p>agraph #ab 7p>agraph #e (
,,it-#cje;,r#c7 reflects subsec;n
#bdh7#i.a7 a4$ 0,bill ;,c-#ib4 ,?
provi.n expla9s ! circum/.es "u : a tru/
% 2 3sid]$ 6be cr1t$ 0a taxpay]'s w =
purposes (! ,act4 ,? provi.n replac$ a
simil> rule t 0 f.d 9 subsec;n #gj7#f.a7
: appli$ = purposes ( subsec;n #gj7#f7 &
p>agraph #ajd7#d77a74
  ,p>agraph #ac 7p>agraph #aj (
,,it-#cje;,r#c7 reflects ! ,bill
;,c-#aci am5d;ts 6subsec;n #ajh7#c7
relat+ 6! descrip;n (! types ( divid5ds
ref]r$ 6in t provi.n4                #ch
             ,,it-#cje;,r#d          d#g
  ,p>agraph #af has be5 a4$ 6cl>ify !
implic,ns1 6a sp\se tru/1 (! r5t+ ( r1l
e/ate or ! l5d+ ( m"oy1 9 li<t (!
require;t 7in subsec;n #gj7#f77 t no
p]son except ! sp\se may1 2f ! sp\se's
d1?1 rcv or o!rwise obta9 ! use ( any (!
9come or capital (! tru/4
  ,p>agraphs #ag & #ah 3ta9 ! same 9=m,n
z p>agraphs #c & #d1 respectively1 (
,,it-#bjg;,r4
  ,p>agraph #ai is p>agraph #e ( ,,it-
#bjg;,r1 except t a new example ( :5 a
sp\se tru/ _c 2 8unta9t$0 has be5 a4$4
  ,p>agraph #bj replaces p>agraph #f (
,,it-#bjg;,r & reflects relevant ,bill
;,c-#ib am5d;ts 6subsec;ns #gj7#e7 &
7#g74 ,subsec;n #gj7#e7 0 am5d$ 6provide
t ! deem$ 4posi;n (a taxpay]'s deprecia#
prop]ty1 "u t provi.n1 wd 2 = proce$s
equal 6! fair m>ket value (! prop]ty
immly 2f ! taxpay]'s d1?4 ,prior 6?
am5d;t 6subsec;n #gj7#e71 deprecia#
prop]ty 0
                                     #ci
             ,,it-#cje;,r#d           #h
ess5ti,y deem$ 6h be5 4pos$ ( immly 2f
d1? = proce$s equal 6midpo9t 2t !
undepreciat$ capital co/ &! fair m>ket
value (! prop]ty immly 2f d1?4 ,am5d;ts
6subsec;n #gj7#g7 5sure t ! elec;n
ref]r$ 6in t provi.n is made 9 ! regul>
9come tax return =! ye> ( d1?4 ,!
am5d;ts provide t a net 9come /abiliz,n
a3.t cd n 2 li/$ = purposes ( unta9t+ a
sp\se tru/ & !y delete ! ref];es to
8specifi$0 prop]ties f subsec;n #gj7#g74
  ,! example 9 p>agraph #bj is ess5ti,y
! same z 9 p>agraph #f ( ,,it-#bjg;,r1
except t d1? duties h be5 remov$ f !
example = simplific,n purposes s9ce s*
duties >e n -mon4
  ,p>agraphs #ba & #bb >e a re^w+ &
reorganiz,n ( p>agraphs #g & #h ( ,,it-
#bjg;,r4 ,! ref];e to 8specifi$0 capital
prop]ty1 9 p>agraph #g1 has be5 delet$ z
a result ( am5d;ts 6subsec;n #gj7#g7
7see 4cus.n 9 p>agraph #bj abv74

                                     #dj
             ,,it-#cje;,r#d          a#h
  ,p>agraphs #bc & #bd 3ta9 ! same 9=m,n
z p>agraphs #i & #aj1 respectively1 (
,,it-#bjg;,r4
  ,p>agraph #be replaces p>agraph #aa (
,,it-#bjg;,r & reflects ! dele;n 0,bill
;,c-#ib (! ref];es to 8specifi$0
prop]ties f subsec;n #gj7#g74
  ,p>agraph #bf 3ta9s ! same 9=m,n z
p>agraph #ab ( ,,it-#bjg;,r & p>agraph
#i ( ,,it-#cje;,r#c4
  ,p>agraph #bg 3ta9s ! same 9=m,n z
p>agraph #ae ( ,,it-#bjg;,r4
  ,p>agraph #bh replaces p>agraph #ac (
,,it-#bjg;,r4 ,! p>agraph reflects !
,bill ;,c-#ah am5d;t 6p>agraph
#aej7#a77b7 =! fil+ d1dl9e =a dec1s$'s
9come tax returns = tax,n ye>s prior 6!
ye> ( d1?4 ,a ,note has be5 a4$ foll[+ !
p>agraph 6reflect a propos$ am5d;t
6p>agraphs #aej7#a77b7 & 7d74
  ,p>agraph #bi 3ta9s ! same 9=m,n z
p>agraph #ad ( ,,it-#bjg;,r4
  ,p>agraphs #cj & #ca reflect ! a4i;n (
subsec;ns #ab7#aj.b71 #gj7#e.d7 &    #da
             ,,it-#cje;,r#d          b#h
#gj7#f.a7 &! am5d;t ( subsec;n #gj7#f.b7
0,bill ;,c-#ib4 ,! p>agraphs briefly
4cuss ! tax 3sequ;es =a dec1s$ taxpay]1
": am.ts 7 held = or on 2half (! taxpay]
9 8 or h] ,,nisa ,fund ,numb] #b at ! "t
( d1?4 ,9 "picul>1 ! p>agraphs 4cuss
subsec;n #gj7#f.a7 : provides =a def]ral
( ^! tax 3sequ;es1 ": ! taxpay]'s ,,nisa
is transf]r$ or 4tribut$ 6! taxpay]'s
sp\se or 6a tru/ e/abli%$ 9 fav\r (!
sp\se &! o!r require;ts ( t provi.n >e
met4
  ,p>agraph #cb reflects ! ref];e
6subsec;n #gj7#f.a7 9 subsec;n #gj7#g7 :
0 am5d$ 0,bill ;,c-#ib4 ,z a result1
subsec;n #gj7#g7 may 2 us$ to 8unta9t0
c]ta9 types ( 8ta9t$0 sp\se tru/s 9 ord]
6p]mit ! rollov] provid$ 0subsec;n
#gj7#f.a74
  ,p>agraph #cc has be5 a4$ 64cuss
p>agraph #e ( ,>ticle ,,xxixb (!
,canada-,unit$ ,/ates ,9come ,tax ,3v5;n
7#aihj74
                                     #db