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

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act--,losses on
  ,%>es on ,: ,divid5ds ,h ,be5 ,rcvd
,numb]3 ,,it-#cbh;,r#c
,date3 ,febru>y #ba1 #aiid
,ref];e3 ,subsec;ns #aab7#c71 7#c.a71
  7#c.b71 7#d71 7#d.a71 7#d.b71 7#d.c7 &
  7#g7 7,al ,sec;ns #i1 #aac1 #aae1
  ,subsec;ns #aj7#a71 #dj7#a71 #ajd7#ai7
  & 7#bj71 #aab7#a71 #aca7#a71 #ach7#f7
  & #bdh7#f71 & ,"p ,,iv & ,"p ,,vii7

               ,applic,n
    
  ,? bullet9 c.els & replaces ,9t]pret,n
,bullet9 ,,it-#cbh;,r#b1 dat$ ,may #bg1
#aihe & ,special ,rel1se ,,it-#cbh;,r#b1
dat$ ,augu/ #ai1 #aihh4


                                      #a
                ,summ>y              a#a
    
  ,! purpose ( ? bullet9 is 6expla9 !
8/op-loss0 rules 9 sec;n #aab : may
apply 6reduce a taxpay]'s loss on ! sale
(a %>e 0! am.t ( c]ta9 divid5ds rcvd on
! %>e4 ,! bullet9 4cusses ! rules t
apply 6losses result+ f transac;ns 9
%>es t >e capital prop]ty & transac;ns 9
%>es t >e n capital prop]ty4 ,x al
4cusses an adju/;t 6! value (a %>e held
9 9v5tory t may apply ": c]ta9 divid5ds
h be5 rcvd on ! %>e4

          ,4cus.n & ,9t]pret,n
    
     ,%>es ,t ,>e ,capital ,prop]ty
            7p>agraphs #a-d7
    
#a4 ,"u subsec;n #aab7#c71 ": a corpor,n
  [ns a %>e t is capital prop]ty & rcvs
  divid5ds describ$ 9 #c 2l on ! %>e1 x
  m/ reduce any loss >is+ f a transac;n
  9 respect ( t %>e 0! am.t ( ^?
  divid5ds1 un.s                      #b
             ,,it-#cbh;,r#c          b#a
  7a7 ! corpor,n [n$ ! %>e = at l1/ #cfe
    "ds 2f su/a9+ ! loss2 &
  7b7 ! corpor,n1 al"o or ) p]sons n
    d1l+ at >m's l5g? ) x1 did n [n m
    ?an #e@3p (! issu$ %>es ( any class
    (! capital /ock (! pay] corpor,n at
    ! "t ! divid5d 0 rcvd4
#b4 ,subsec;ns #aab7#c.a7 & 7#c.b7
  provide rules simil> 6^? 9 #a abv ": a
  %>e is [n$ z capital prop]ty 0a
  "pn]%ip ( : a corpor,n is a "pn] or 0a
  tru/ ( : a corpor,n is a b5efici>y4
  ,": s* a
--------------------------------------#b
  "pn]%ip [ns ! %>e1 ! corporate "pn]'s
  %>e ( any "pn]%ip loss on a transac;n
  9volv+ ! %>e is reduc$ 0t corpor,n's
  %>e ( divid5ds describ$ 9 #c 2l4 ,": a
  tru/ holds ! %>e1 ! tru/'s loss on a
  transac;n 9volv+ ! %>e is reduc$ 0!
  am.t ( divid5ds describ$ 9 #c 2l t h
  be5 designat$1 0! tru/1 z divid5ds
  deem$ 6be rcvd 0! corporate b5efici>y
  "u subsec;n #ajd7#ai71 or = : !     #c
             ,,it-#cbh;,r#c          a#b
  tru/ has made a design,n "u subsec;n
  #ajd7#bj7 9 respect (! corporate
  b5efici>y4
#c4 ,! divid5ds : >e tak5 96a3.t 9
  det]m9+ a corpor,n's loss "u subsec;n
  #aab7#c7 or a corpor,n's %>e (a
  "pn]%ip loss "u subsec;n #aab7#c.a7 on
  a %>e transac;n >e3
  7a7 taxa# divid5ds on ! %>e : 7
    7;i7 deducti# "u sec;n #aab or
      subsec;n #ach7#f7 9 -put+ !
      corpor,n's taxa# 9come1 &
    7;ii7 n subject 6tax "u ,"p ,,vii (!
      ,act z x r1d on ,m>* #ca1 #aigg2
  7b7 capital divid5ds on ! %>e2 or
  7c7 life 9sur.e capital divid5ds on !
    %>e4
  
  ,! divid5ds tak5 96a3.t 9 det]m9+ !
  loss (a tru/ "u subsec;n #aab7#c.b7 >e
  ! same z abv1 except t ! require;ts 9
  7a77;i7 & 7;ii7 d n apply & 7a7 wd
  ref] only to 8taxa# divid5ds on !
  %>e04                               #d
             ,,it-#cbh;,r#c          b#b
#d4 ,subsec;n #aab7#g7 provides special
  rules = apply+ ! provi.ns ( subsec;ns
  #aab7#c71 7#c.a7 & 7#c.b7 6losses on a
  new %>e t _h previ\sly be5 acquir$ =
  an old %>e 9 an ex*ange transac;n "u
  sec;n #ea1 #he.a1 #hf or #hg4 ,c]ta9
  divid5ds 7see #c abv7 rcvd or
  designat$ on ! new %>e1 plus s*
  divid5ds rcvd or designat$ on ! old
  %>e1 reduce any loss >is+ f a
  transac;n 9volv+ ! new %>e4 ,if !
  numb] ( old & new %>es ex*ang$ 0 n
  equal1 ! reduc;n 9 respect ( divid5ds
  rcvd or designat$ on ! old %>e7s71 z
  !y apply 6a new %>e1 w 2 calculat$ z
  foll[s3
--------------------------------------#c
  divid5ds rcvd or designat$ on all !
  old ex*ang$ %>es multipli$ 0adju/$ co/
  base (a new %>e immly af ! ex*ange
  divid$ 0adju/$ co/ %>esbase ( all new
  immly af ! ex*ange equals reduc;n 9 !
  loss on a new %>e
                                      #e
             ,,it-#cbh;,r#c          a#c
,note3
  ,if ! draft legisl,n rel1s$ 0! ,m9i/]
  ( ,f9.e on ,augu/ #cj1 #aiic is 5act$
  96law z curr5tly propos$1 p>agraph
  #aab7#g77b7 w 2 am5d$ s t ! am.t (
  divid5ds on an old ex*ang$ %>e t c 2
  appli$ 6reduce a loss r1liz$ on !
  4posi;n (a new %>e w 2 limit$ 6! less]
  (
    a7 ! divid5ds 7describ$ 9 #c abv7
      rcvd or designat$ on ! old ex*ang$
      %>e1 &
    b7 ! adju/$ co/ base (! old ex*ang$
      %>e immly 2f ! ex*ange4
  ,if ! numb] ( old & new %>es ex*ang$ 0
  n equal1 ! reduc;n : relates 6! old
  ex*ang$ %>e7s7 w 2 calculat$ z foll[s3

  total ( all am.ts1 ea* ( : is ! less]
  ( a7 & b7 abv = ea* old ex*ange %>e
  multipli$ 0adju/$ co/ base (a new %>e
  immly af ! ex*ange divid$ 0adju/$ co/
  base ( all new %>es immly af !
                                      #f
             ,,it-#cbh;,r#c          b#c
  ex*ange multipli$ 0reduc;n 9 ! loss on
  a new %>e

  ,? propos$ am5d;t w apply 6losses >is+
  9 ! #aiib & subsequ5t tax,n ye>s4

        ,%>es ,t ,>e ,n ,capital
       ,prop]ty 7p>agraphs #e-g7
    
#e4 ,subsec;ns #aab7#d71 7#d.b7 &
  7#d.c71 : apply 6any taxpay]1 op]ate 9
  a mann] simil> 6subsec;ns #aab7#c71
  7#c.a7 & 7#c.b7 except t !y reduce !
  loss on 4posi;n (a %>e t is n a
  capital prop]ty4

  ,a loss >is+ 9 respect (a %>e
  transac;n subject 6! rules 9 subsec;n
  #aab7#d7 7! %>e is [n$ 0a taxpay]7 or
  7#d.b7 7! %>e is [n$ 0a "pn]%ip ( : !
  taxpay] is a memb]7 w 2 reduc$ z
  foll[s3
  7a7 if ! taxpay] is an 9dividual1 !
    loss w 2 reduc$ 0divid5ds         #g
             ,,it-#cbh;,r#c          c#c
    7exclud+ capital ga9s divid5ds rcvd
    f a mutual fund corpor,n7 rcvd on !
    %>e if !
--------------------------------------#d
    corpor,n t issu$ ! %>e is a taxa#
    ,canadian corpor,n2 &
  7b7 if ! taxpay] is a corpor,n1 ! loss
    w 2 reduc$ 0taxa# divid5ds deducti#
    "u sec;n #aab1 subsec;n #aae7#a7 or
    subsec;n #ach7#f7 9 calculat+ !
    corpor,n's taxa# 9come or taxa#
    9come e>n$ 9 ,canada1 & any divid5d
    o!r ?an a taxa# divid5d4
  
  ,! loss reduc;ns describ$ abv d n
  apply 6any divid5ds : 7 subject 6tax
  "u ,"p ,,vii (! ,act z x r1d on ,m>*
  #ca1 #aigg4 ,^! rules apply = tax,n
  ye>s af #aihi4 ,h["e1 !y al apply =!
  #aihe 6#aihi tax,n ye>s if ! taxpay]
  elect$ 6h !m apply 0notify+ ! ,m9i/] 9
  writ+ 2f ,decemb] #aa1 #aiic4 ,2f
  #aiij 7or 2f #aihe if ! elec;n has be5
  made7 a taxpay]'s loss or a         #h
             ,,it-#cbh;,r#c          a#d
  taxpay]'s %>e (a "pn]%ip loss wd h 6be
  reduc$ 0any divid5ds rcvd on ! %>e1
  exclud+ any capital ga9s divid5ds rcvd
  f a mutual fund corpor,n & any por;n (
  taxa# divid5ds on : ! taxpay] 0
  requir$ 6pay tax "u ,"p ,,vii (! ,act
  z x r1d on ,m>* #ca1 #aigg4

  ,subsec;n #aab7#d.c7 applies if !
  taxpay] is ! b5efici>y (a tru/ 7o!r
  ?an a prescrib$ tru/7 t [ns a %>e t is
  n capital prop]ty &! taxpay] rcvs a
  divid5d 9 respect (! %>e pursuant 6a
  design,n "u subsec;n #ajd7#ai7 or !
  tru/ has made a design,n "u subsec;n
  #ajd7#bj7 9 respect (! taxpay] =a
  divid5d on ! %>e4 ,subsec;n #aab7#d.c7
  requires t any loss (! tru/ >is+ f a
  transac;n 9 respect (! %>e m/ 2 reduc$
  0any divid5ds 7o!r ?an a capital ga9s
  divid5d rcvd f a mutual fund corpor,n7
  designat$ "u subsec;n #ajd7#ai7 or
  7#bj74
                                      #i
             ,,it-#cbh;,r#c          b#d
,note3
  ,if ! draft legisl,n rel1s$ 0! ,m9i/]
  ( ,f9.e on ,augu/ #cj1 #aiic is 5act$
  96law z curr5tly propos$1 subp>agraphs
  #aab7#d77d77;ii7 & #aab7#d.b77d77;ii7
  w 2 am5d$ s t !y al exclude a capital
  ga9s divid5d rcvd f a mutual fund
  corpor,n4 ,z a result1 7b7 abv wd 2
  revis$ to3
    7b7 if ! taxpay] is a corpor,n1 !
      loss w 2 reduc$ 0taxa# divid5ds
      deducti# "u sec;n #aab1 subsec;n
      #aae7#a7 or subsec;n #ach7#f7 9
      calculat+ ! corpor,n's taxa# 9come
      or taxa# 9come e>n$ 9 ,canada1 &
      any divid5d o!r ?an a capital ga9s
      divid5d rcvd f a mutual fund
      corpor,n or a taxa# divid5d4
--------------------------------------#e
  ,? propos$ am5d;t w apply 6losses >is+
  9 ! #aiij & subsequ5t tax,n ye>s2
  h["e1 x w al apply 6! #aihe 6#aihi
  tax,n ye>s if ! abv-not$ elec;n has
  be5 made4                          #aj
             ,,it-#cbh;,r#c          a#e
#f4 ,! /op-loss rules 9 #e abv d n apply
  if3
  7a7 ! taxpay]1 "pn]%ip or tru/1 z !
    case may be1 [n$ ! %>e #cfe "ds or
    l;g] 2f ! loss 0 su/a9$2 &
  7b7 al"o or ) p]sons ! taxpay] did n
    d1l ) at >m's l5g?1 !
    7;i7 taxpay]1
    7;ii7 "pn]%ip &! taxpay] 7"pn]71 or
    7;iii7 tru/ &! taxpay] 7b5efici>y71
  z ! case may be1 did n [n m ?an #e@3p
  (! issu$ %>es ( any class (! capital
  /ock (! pay] corpor,n at ! "t !
  divid5d 0 rcvd4
#g4 ,! 9v5tory value (a %>e : is n a
  capital prop]ty (a taxpay] 7o!r ?an a
  prescrib$ tru/7 or a "pn]%ip : holds x
  is det]m9$ "u subsec;n #aab7#d.a74 ,?
  subsec;n provides t ! fair m>ket value
  (! %>e w 2 deem$ 6be xs fair m>ket
  value o!rwise det]m9$ at ! "t !
  9v5tory is 2+ valu$ plus3

                                     #aa
             ,,it-#cbh;,r#c          b#e
  7a7 if ! %>ehold] is an 9dividual &!
    corpor,n pay+ ! divid5d is a taxa#
    ,canadian corpor,n1 ! total ( all
    divid5ds 7except a capital ga9s
    divid5d rcvd f a mutual fund
    corpor,n7 rcvd 2f t "t on ! %>e1 or
    t wd h be5 rcvd if ! ,act 7 r1d )\t
    ref];e 6subsec;n #ajd7#ai72
  7b7 if ! %>ehold] is a corpor,n1 any
    taxa# divid5d rcvd on ! %>e 2f t "t
    t 0 deducti# "u sec;n #aab or #aac
    or subsec;n #aae7#a7 or #ach7#f7 9
    calculat+ ! corpor,n's taxa# 9come
    or taxa# 9come e>n$ 9 ,canada & any
    divid5d o!r ?an a taxa# divid5d rcvd
    on ! %>e 2f t "t2 &
  7c7 if ! %>ehold] is a "pn]%ip1 !
    total ( any divid5ds 7o!r ?an a
    capital ga9s divid5d rcvd f a mutual
    fund corpor,n7 rcvd on ! %>e 2f t
    "t4
  

                                     #ab
             ,,it-#cbh;,r#c          c#e
  ,! a4i;ns 6! value ( %>es held 9
  9v5tory describ$ abv d n apply 6any
--------------------------------------#f
  divid5ds : 7 subject 6tax "u ,"p ,,vii
  (! ,act z x r1d on ,m>* #ca1 #aigg4
  ,^! rules apply = tax,n ye>s af #aihi4
  ,h["e1 !y al apply =! #aihe 6#aihi
  tax,n ye>s if ! taxpay] elect$ 6h !m
  apply 0notify+ ! ,m9i/] 9 writ+ 2f
  ,decemb] #aa1 #aiic4 ,2f #aiij 7or 2f
  #aihe if ! elec;n has be5 made7 ! fair
  m>ket value o!rwise det]m9$ (! %>es1
  held 0any hold] ref]r$ 6abv1 wd h 6be
  9cr1s$ 0any divid5ds rcvd 9 respect (!
  %>es 7det]m9$ )\t ref];e 6subsec;n
  #ajd7#ai771 exclud+ any capital ga9s
  divid5ds f a mutual fund corpor,n4

  ,subsec;n #aab7#d.a7 does n apply if !
  %>ehold] held ! %>e = at l1/ #cfe "ds
  2f ! "t ( 9v5tory valu,n &! %>ehold]1
  al"o or tgr ) any non->m's l5g? p]son1
  did n hold m ?an #e@3p (! issu$ %>es (
                                     #ac
             ,,it-#cbh;,r#c          a#f
  any class (! pay] corpor,n at ! "t !
  divid5d 0 rcvd4

,note3
  ,if ! draft legisl,n rel1s$ 0! ,m9i/]
  ( ,f9.e on ,augu/ #cj1 #aiic is 5act$
  96law z curr5tly propos$1 subp>agraph
  #aab7#d.a77d77;ii7 w 2 am5d$ s t x al
  excludes a capital ga9s divid5d rcvd f
  a mutual fund corpor,n4 ,z a result1
  7b7 abv wd 2 revis$ to3
    7b7 if ! %>ehold] is a corpor,n1 any
      taxa# divid5d rcvd on ! %>e 2f t
      "t t 0 deducti# "u sec;n #aab or
      #aac or subsec;n #aae7#a7 or
      #ach7#f7 9 calculat+ ! corpor,n's
      taxa# 9come or taxa# 9come e>n$ 9
      ,canada & any divid5d rcvd on !
      %>e 2f t "t1 o!r ?an a capital
      ga9s divid5d rcvd f a mutual fund
      corpor,n or a taxa# divid5d2 &4
  ,? propos$ am5d;t w apply 6! #aiij &
  subsequ5t tax,n ye>s2 h["e1 x w al
                                     #ad
             ,,it-#cbh;,r#c          b#f
  apply 6! #aihe 6#aihi tax,n ye>s if !
  abv-not$ elec;n has be5 made4

     ,g5]al ,-;ts 7p>agraphs #h-aa7
    
#h4 ,! loss ref]r$ 6in subsec;ns
  #aab7#c71 7#c.a7 & 7#c.b7 is a capital
  loss )9 ! m1n+ ( p>agraph #ci7#a77b7 &
  calculat$ "u p>agraph #dj7#a77b74 ,!
  am.t (! loss ref]r$ 6in subsec;ns
  #aab7#d71 7#d.b7 & 7#d.c7 is an am.t
  calculat$ 0ref];e 6! a7regate (! co/s
  ( acquir+ ! %>e & o!r relat$ co/s us$
  9 det]m9+ 9come4 ,adju/;ts "u
  subsec;ns #aab7#d71 7#d.a71 7#d.b7 &
  7#d.c7 >e det]m9ants ( 9come or loss f
  a busi;s or prop]ty )9 sec;n #i4
--------------------------------------#g
#i4 ,! 9clu.n (! am.t (a divid5d 9
  calculat+ ! fair m>ket value (a %>e "u
  subsec;n #aab7#d.a7 does n prev5t !
  9clu.n ( all or any "p ( t divid5d 9 !
  calcul,n (a loss pursuant 6subsec;n
  #aab7#d71 7#d.b7 or 7#d.c7 at      #ae
             ,,it-#cbh;,r#c          a#g
  any subsequ5t "t4 ,! example 9 !
  ,app5dix illu/rates ? pr9ciple4
#aj4 ,"p ,,iv tax on a divid5d rcvd is
  applica# ev5 ?\< ! divid5d1 or a "p
  "!(1 0 appli$ 6reduce a loss =
  purposes ( subsec;n #aab7#c71 7#c.a71
  7#c.b71 7#d71 7#d.b7 or 7#d.c71 or
  69cr1se ! fair m>ket value (a %>e "u
  subsec;n #aab7#d.a74
#aa4 ,= purposes ( subsec;ns #aab7#c7
  6#aab7#d.c71 any ref];e to 8#e@3p (!
  issu$ %>es ( any class (! capital
  /ock0 %d 2 9t]pret$ z 8#e@3p (! issu$
  %>es ( any s]ies (a class ( %>es0 :5
  "! is m ?an "o s]ies (! same class (
  %>es4

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




                                     #af
             ,,it-#cbh;,r#c          b#g
  ,director1 ,te*nical ,public,ns
    ,divi.n
  ,legislative & ,9t]gov]n;tal ,a6airs
    ,bran*
  ,rev5ue ,canada--,cu/oms1 ,excise &
    ,tax,n
  #hge ,h]on ,road
  ,ottawa1 ,ont>io
  ,k#a;,a #j;,l#h
--------------------------------------#h
                ,app5dix
    
,example

  ,assump;ns
#a4 ,co/ 6,corpor,n ;,a ( %>e (
  ,corpor,n ;,b acquir$ on ,june
  #bh1 #aiia z trad+ prop]ty """""" 4#hj
#b4 ,taxa# divid5d rcvd f ,corpor,n
  ;,b on ,augu/ #ae1 #aiia &
  deduct$ "u subsec;n #aab7#a7
  0,corpor,n ;,a """"""""""""""""""" 4#d

                                     #ag
             ,,it-#cbh;,r#c          a#h
#c4 ,fair m>ket value ( %>e at
  #aiia fiscal ye> 5d--,novemb] #cj 4#gh
#d4 ,proce$s ( 4posi;n ( %>e1 ,m>*
  #e1 #aiib """"""""""""""""""""""" 4#ge
#e4 ,corpor,n ;,a held m ?an #e@3p
  (! issu$ %>es ( ,corpor,n ;,b at
  all relevant "ts4

  ,applic,n ( subsec;n #aab7#d.a7
,co/ ( %>e """""""""""""""""""""""" 4#hj
,deem$ fair m>ket value ( %>e
  det]m9$ "u subsec;n #aab7#d.a73
  ,fair m>ket value o!rwise
    det]m9$ """""""""""""""""" 4#gh
  ,taxa# divid5d rcvd """"""""" 4#d 4#hb
,l[] ( co/ & fair m>ket value
  at ,novemb] #cj1 #aiia """""""""" 4#hj
,loss f 9v5tory adju/;ts """""""""" ,nil





                                     #ah
             ,,it-#cbh;,r#c          b#h
  ,applic,n ( subsec;n #aab7#d7
,c>ri$ value ( 9v5tory ,decemb] #a1
  #aiia """"""""""""""""""""""""""" 4#hj
,proce$s ( 4posi;n1 ,m>* #e1 #aiib  4#ge
,loss o!rwise det]m9$ """""""""""""" 4#e
,less3 ,taxa# divid5d rcvd """"""""" 4#d
,loss det]m9$ "u subsec;n #aab7#d7   4#a
--------------------------------------#i
         ,explan,n ( ,*anges =
          ,9t]pret,n ,bullet9
             ,,it-#cbh;,r#c
    
         ,losses on ,%>es on ,:
        ,divid5ds ,h ,be5 ,rcvd
    
               ,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
                                     #ai
                ,ov]view             a#i
    
  ,? bullet9 4cusses ! 8/op-loss0 rules
9 sec;n #aab : may apply 6reduce a
taxpay]'s loss on ! sale (a %>e t is
capital prop]ty1 z well z ! loss on !
sale (a %>e t is n capital prop]ty1 0!
am.t ( c]ta9 divid5ds rcvd on ! %>e4 ,x
al 4cusses an adju/;t 6! fair m>ket
value (a %>e held 9 9v5tory t may apply
": c]ta9 divid5ds h be5 rcvd on ! %>e4
  ,we revis$ ! bullet9 6reflect *anges 9
! ,9come ,tax ,act result+ f ,bill
;,c-#ah1 : rcvd ,royal ,ass5t on
,decemb] #ag1 #aiia4 ,9 a4i;n1 ! propos$
am5d;ts 9 ! ,augu/ #cj1 #aiic draft
legisl,n1 : a6ect ! bullet91 h be5
reflect$ 9 italics ": applica#4 ,! 3t5ts
( ? bullet91 h["e1 >e n a6ect$ 0!
propos$ *anges 9 ,bill ;,c-#acf4 7,bill
;,c-#acf 0 ta#d 9 ! ,h\se ( ,-mons 9
,june #aiic & w 2 re9troduc$1 al;g )!
,augu/ #cj1 #aiic draft legisl,n1 9
bills af ,p>lia;t resumes 9 ,janu>y
#aiid1 z 9dicat$ 0! ,m9i/] ( ,f9.e   #bj
             ,,it-#cbh;,r#c          b#i
9 a news rel1se dat$ ,decemb] #bj1
#aiic47

      ,legislative & ,o!r ,*anges
    
  ,"?\t ! bullet91 we h made m9or *anges
= cl>ific,n or r1dabil;y purposes4
  ,9 new p>agraph #c 7=m] p>agraph #d71
! divid5ds : >e tak5 96a3.t 9 det]m9+ !
loss (a tru/ "u subsec;n #aab7#c.b7 h
be5 expla9$ sep>ately1 s9ce !y di6]
sli<tly f ^? tak5 96a3.t 9 det]m9+ !
loss (a corpor,n "u subsec;n #aab7#c71
or ! loss (a corporate "pn] "u subsec;n
#aab7#c.a74
  ,! note at ! 5d ( new p>agraph #d 7=m]
p>agraph #e7 reflects ! propos$ am5d;t
6p>agraph #aab7#g77b7 9 ! ,augu/ #cj1
#aiic draft legisl,n4 ,? am5d;t sets a
limit on ! am.t ( divid5ds on an old
ex*ang$ %>e t c 2 appli$ 6reduce a loss
r1liz$ on ! 4posi;n (a new

                                     #ba
             ,,it-#cbh;,r#c          #aj
%>e 7acquir$ =! old %>e 9 c]ta9 ex*ange
transac;ns74
  ,new p>agraph #e 7f/ "p ( =m] p>agraph
#f7 reflects ! am5d;ts 9 ,bill ;,c-#ah
6subsec;ns #aab7#d7 & 7#d.b74 ,^!
am5d;ts relate 6! divid5ds : reduce a
loss on ! 4posi;n (a %>e t is n a
capital prop]ty (a taxpay] 7subsec;n
#aab7#d771 or (a "pn]%ip ( : ! taxpay]
is a memb] 7subsec;n #aab7#d.b774
,det]m9+ ! loss reduc;n w v>y dep5d+ on
:e!r ! taxpay] is an 9dividual or a
corpor,n4 ,2c subsec;n #aab7#d.c7 0 n
am5d$ 9 ,bill ;,c-#ah1 we sep>at$ !
4cus.n on ? subsec;n f ! 4cus.n on
subsec;ns #aab7#d7 & 7#d.b74
  ,! note at ! 5d ( new p>agraph #e
reflects ! propos$ am5d;ts 6subp>agraphs
#aab7#d77d77;ii7 & #aab7#d.b77d77;ii7 9
! ,augu/ #cj1 #aiic draft legisl,n4 ,!
am5d$ provi.ns wd exclude f ! 8/op-loss0
rules1 "!91 c]ta9 capital ga9s divid5ds4
  ,new p>agraph #f 7second "p ( =m]
p>agraph #f7 li/s ! excep;ns 6!      #bb
             ,,it-#cbh;,r#c         a#aj
8/op-loss0 rules 9 subsec;ns #aab7#d71
7#d.b7 & 7#d.c71 )! =m] p>agraph *ang$ =
cl>ific,n purposes4
  ,new p>agraph #g 7=m] p>agraph #g7
reflects ! ,bill ;,c-#ah am5d;ts
6subsec;n #aab7#d.a74 ,^! am5d;ts relate
6! divid5ds tak5 963sid],n 9 det]m9+ !
9v5tory value (a %>e t is n capital
prop]ty4 ,9 a4i;n1 ": ! %>e is held 0an
9dividual1 ^! am5d;ts add a require;t )
respect 6! corpor,n pay+ ! divid5d4
  ,! note at ! 5d ( new p>agraph #g
reflects ! propos$ am5d;t 6subp>agraph
#aab7#d.a77d77;ii7 9 ! ,augu/ #cj1 #aiic
draft legisl,n4 ,! am5d$ provi.n wd
exclude c]ta9 capital ga9s divid5ds f !
9v5tory valu,n rule ": ! hold] (! %>e is
a corpor,n4
  ,new p>agraph #h replaces =m] p>agraph
#h4 ,! ref];es 6subsec;ns #d7#a7 &
#i7#b71 9 ! =m] p>agraph1 h be5 revis$
6sec;n #i4 ,! ref];e 6subsec;n #d7#a7 is
n requir$4 ,9 a4i;n1 subsec;n #i7#b7
ref]s only 6losses1 ":as !           #bc
             ,,it-#cbh;,r#c         b#aj
provi.ns ref]r$ 6in ! la/ s5t;e ( new
p>agraph #h may 2 adju/;ts 69come4
  ,we h revis$ ! ,app5dix 69dicate t !
divid5ds rcvd 7 deduct$ "u subsec;n
#aab7#a71 6-ply )! require;ts ( revis$
subsec;ns #aab7#d7 & 7#d.a7 7z expla9$ 9
p>agraph #e & #g (! bullet974 ,9 a4i;n1
we h *ang$ ! dates (! example 6m curr5t
dates4














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