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

              ,9COME ,TAX
          ,9T]PRET,N ,BULLET9
    
,NUMB]3 ,,IT-#CDI;,R#C
,DATE3 ,NOVEMB] #G1 #AIIF
,SUBJECT3 ,,9COME ,,TAX ,,ACT
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,REV5UE ,CANADA'S TE*NICAL 9T]PRET,NS (
9COME TAX LAW4 ,DUE 6_! TE*NICAL NATURE1
,,IT'S >E US$ PRIM>ILY 0DE"P;TAL      #A
             ,,IT-#CDI;,R#C          A#A
/AFF1 TAX SPECIALI/S1 & O!R 9DIVIDUALS
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,,IT HAS N YET BE5 REVIS$ 6REFLECT
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                                      #B
             ,,IT-#CDI;,R#C          B#A
TAX,N YE>S OR = TRANSAC;NS 5T]$ 96AF !
DATE (! ,,IT4
  ,A *ANGE 9 A DE"P;TAL 9T]PRET,N MAY AL
2 ANN\NC$ 9 ! ,9COME ,TAX ,TE*NICAL
,NEWS4
  ,IF Y H ANY -;TS REG>D+ MATT]S 4CUSS$
9 ? ,,IT1 PL1SE S5D !M TO3
  
  ,DIRECTOR1 ,BUSI;S & ,PUBLIC,NS
    ,DIVI.N
  ,9COME ,TAX ,RUL+S ,DIRECTORATE
  ,POLICY & ,LEGISL,N ,BRAN*
  ,REV5UE ,CANADA
  ,OTTAWA ,,ON
  ,K#A;,A #J;,L#E

  ,9T]PRET,N BULLET9S C 2 F.D ON !
,REV5UE ,CANADA ,9T]NET SITE AT3
_+WWW.RC.GC.CA_:




                                      #C
                 ,3T5TS              C#A
    
,APPLIC,N
,SUMM>Y
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                                      #D
             ,,IT-#CDI;,R#C          D#A
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               ,APPLIC,N
    
  ,? BULLET9 C.ELS & REPLACES ,9T]PRET,N
,BULLET9 ,,IT-#CDI;,R#B DAT$ ,JULY #AG1
#AIHG & XS ,SPECIAL ,REL1SE DAT$
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                ,SUMM>Y
    
  ,SUBSEC;NS #GJ7#I71 7#I.A71 7#I.B7 &
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                                      #E
             ,,IT-#CDI;,R#C          E#A
PROP]TY (A PRESCRIB$ CLASS7 ON OR AF !
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! D1? (! SP\SE 6A * (! TAXPAY]4
--------------------------------------#B
  ,SUBSEC;N #GJ7#I.B7 IS 3C]N$ )!
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6A * (! TAXPAY]4
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             ,,IT-#CDI;,R#C          A#B
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          ,4CUS.N & ,9T]PRET,N
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             ,,IT-#CDI;,R#C          B#B
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                                      #H
             ,,IT-#CDI;,R#C          C#B
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             ,,IT-#CDI;,R#C          D#B
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             ,,IT-#CDI;,R#C          E#B
  2+ US$ PR9CIP,Y 9 ! BUSI;S ( F>M+4 ,IF
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  QUALIFY Z 2+ US$ PR9CIP,Y 9 ! BUSI;S (
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             ,,IT-#CDI;,R#C          F#B
  N APPLY 6S* PROP]TY [N$ AT T "T 0A
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--------------------------------------#C
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             ,,IT-#CDI;,R#C          A#C
    ,ACT B XS M1N+ = PURPOSES (
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    VE/$ 9DEF1SIBLY47
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             ,,IT-#CDI;,R#C          B#C
    ! REQUIRE;TS ( SUBSEC;N #GJ7#I7 IF
    HE MAKES ! REQUIR$ PAY;TS )9 !
    /IPULAT$ "T P]IOD & T P]IOD IS )9 !
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#D4 ,SUBSEC;N #AC7#BA.A7 MAY REDET]M9E !
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             ,,IT-#CDI;,R#C          C#C
  6RE/RICT ! POT5TIAL T]M9AL LOSS1 :ILE
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  REF];E TO 8DEC1S$ TAXPAY]0 7 TO 8SP\SE
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  ,SEE ! CURR5T V].N ( ,,IT-#BBJ1
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#E4 ,SUBSEC;N #GJ7#I.A7 DOES N REQUIRE T
  ! TRU/1 ! TAXPAY]'S SP\SE1 OR ! * M/ 2
  US+ ! PROP]TY 9 A F>M+ BUSI;S IMMLY 2F
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             ,,IT-#CDI;,R#C          D#C
  6QUALIFY =! ROLLOV] "U SUBSEC;NS
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  PROVI.NS APPLY ONLY 6! SP\SE TRU/
  DESCRIB$ 9 SUBSEC;NS #GJ7#F7 OR
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  ! TA9T$ SP\SE TRU/ 0 UNTA9T$ 0M1NS (
  AN ELEC;N "U SUBSEC;N #GJ7#G7 Z
  DESCRIB$ 9 ! CURR5T V].N ( ,,IT-#CJE1
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#G4 ,IF A SP\SE TRU/ DESCRIB$ 9 SUBSEC;N
  #GJ7#F7 OR #GC7#A7 IS V>I$ )! 3S5T (
  ALL ! B5EFICI>IES 9 ORD] T F>M PROP]TY
  W PASS 6"O OR M (! B5EFICI>IES :O >E
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  REQUIRE;TS ( SUBSEC;N #GJ7#I.A7 >E
  O!RWISE SATISFI$ AF ! TRU/ IS V>I$1 !
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             ,,IT-#CDI;,R#C          E#C
  #GJ7#I.A7 W APPLY 6DET]M9E ! PROCE$S
  6! TRU/ &! CO/ 6A * B5EFICI>Y ( S* F>M
  PROP]TY Z IS TRANSF]R$ OR 4TRIBUT$ 6A
  * (! SETTLOR PURSUANT 6! T]MS ( T V>I$
  TRU/4

       ,FAMILY ,F>M ,CORPOR,NS &
   ,"PN]%IPS 7,SUBSEC;NS #GJ7#I.B7 &
                7#I.C77
    
#H4 ,PURSUANT 6SUBSEC;N #AJJ7#C71 A
  TAXPAY] :O 9H]ITS AN 9T]E/ 9 A "PN]%IP
  B IS N A MEMB] (1 OR DOES N 0VIRTUE (!
  9H]IT.E 2COME A MEMB] (1 T "PN]%IP IS
  DEEM$ 6H ACQUIR$ A "R 6RCV "PN]%IP
  PROP]TY & N 6H ACQUIR$ AN 9T]E/ 9 A
  "PN]%IP4 ,3SEQU5TLY1 S9CE SUBSEC;NS
  #GJ7#I.B7 & #GJ7#I.C7 PROVIDE ONLY =A
  ROLLOV] (A "PN]%IP 9T]E/ 9 A FAMILY
  F>M "PN]%IP1 B N "PN]%IP PROP]TY1 ^?
--------------------------------------#D
  ROLLOV] PROVI.NS W N APPLY 6T "PICUL>
  9H]IT.E4
                                     #AG
             ,,IT-#CDI;,R#C          A#D
#I4 ,"! IS NO PROVI.N 9 EI SUBSEC;N
  #GJ7#I.B7 OR #GJ7#I.C7 =A ROLLOV] 6A *
  ON ! D1? ( AN 9DIVIDUAL (A RESIDUAL
  "PN]%IP 9T]E/ DESCRIB$ 9 SEC;N #IH.A4
  ,SEC;N #IH.B SETS =? ! RULES GOV]N+ A
  TRANSF] ( S* A RESIDUAL "PN]%IP 9T]E/
  ON ! D1? ( AN 9DIVIDUAL4 ,9 ^? RULES1
  X IS PROVID$ T A TAXPAY] 7E4G41 A *
  9H]ITOR7 :O ACQUIRES S* A RESIDUAL
  "PN]%IP 9T]E/ IS DEEM$ 6H ACQUIR$ A "R
  6RCV "PN]%IP PROP]TY & N 6H ACQUIR$ A
  "PN]%IP 9T]E/ 6: SUBSEC;NS #GJ7#I.B7 &
  #GJ7#I.C7 MI<T O!RWISE APPLY4
#AJ4 ,SUBSEC;N #GJ7#I.C7 DOES N REQUIRE
  ! SP\SE TRU/1 SP\SE1 OR * 6BE ACTIVELY
  5GAG$ ON A REGUL> & 3T9U\S BASIS 9 !
  CORPOR,N'S BUSI;S ( F>M+4 ,= "PN]%IP
  PROP]TY1 SUBSEC;N #GJ7#I.C7 REQUIRES T
  ! PROP]TY T IS TRANSF]R$ 6! SP\SE TRU/
  M/ 2 AN 9T]E/ 9 A FAMILY F>M "PN]%IP
  IMMLY 2F ! TRANSF]4 ,H["E1 ON !
  SUBSEQU5T TRANSF] 6! * ! SUBSEC;N ONLY
  REQUIRES T1 IMMLY 2F ! D1? (! SP\SE1 !
  9T]E/ 9 ! "PN]%IP 2 US$ 9 !        #AH
             ,,IT-#CDI;,R#C          B#D
  BUSI;S ( F>M+ 9 ,CANADA & T ALL OR
  SUB/ANTI,Y ALL ( XS PROP]TY 2 US$ 9 T
  BUSI;S4
#AA4 ,! DEF9I;NS ( 89T]E/ 9 A FAMILY F>M
  "PN]%IP0 & 8%>E (! CAPITAL /OCK (A
  FAMILY F>M CORPOR,N0 9 SUBSEC;N
  #GJ7#AJ7 REQUIRE T 8ALL OR SUB/ANTI,Y
  ALL0 (! FAIR M>KET VALUE (! PROP]TY
  [N$ 0! "PN]%IP OR CORPOR,N 2 US$ 9 !
  BUSI;S ( F>M+4 ,! "Q ( :E!R 8ALL OR
  SUB/ANTI,Y ALL0 (! PROP]TY IS US$ 9 !
  BUSI;S ( F>M+ = PURPOSES ( SUBSEC;N
  #GJ7#AJ7 IS 4CUSS$ 9 ! CURR5T V].N (
  ,,IT-#BFH1 ,9T] ,VIVOS ,TRANSF] ( ,F>M
  ,PROP]TY 6,*4 ,! DE"P;TAL PRACTICES
  DESCRIB$ "! = PURPOSES ( 9T] VIVOS
  TRANSF]S 6A * APPLY EQU,Y = PURPOSES
  (! TE/A;T>Y TRANSF]S 4CUSS$ 9 ?
  BULLET94




                                     #AI
      8,F>M+ ,BUSI;S0 & 8,US$ 9 !    C#D
            ,BUSI;S ( ,F>M+0
    
#AB4 ,X IS A "Q ( FACT 6BE DECID$ ON AN
  9DIVIDUAL CASE BASIS :E!R A "PICUL>
  F>M+ OP],N 3/ITUTES A F>M+ BUSI;S AT
  ANY "PICUL> "T4 ,"S (! CRIT]IA : %D 2
  3SID]$ 9 MAK+ ? DET]M9,N >E SET \ 9 !
  CURR5T V].N ( ,,IT-#CBB1 ,F>M ,LOSSES4
  ,H["E1 IF 9 A TAX,N YE> A NEW F>M+
  OP],N HAS BE5 9ITIAT$1 OR A PREVI\S
  OP],N HAS BE5 REACTIVAT$ AF S"EAL YE>S
  ( 9ACTIV;Y1 X MAY 2 DI6ICULT 6DET]M9E
  T A F>M+ BUSI;S 0 C>RI$ ON AT A
  "PICUL> "T 9 T YE>4 ,9 ? REG>D1 REF]
  6! CURR5T V].N ( ,,IT-#CFD1 ,-M;E;T (
  ,BUSI;S ,OP],NS1 : 3TA9S -;TS RELEVANT
  6DET]M9+ ! -M;E;T OR RECOMM;E;T (A
  BUSI;S4
#AC4 ,EV5 ?\< A F>M [N] 79DIVIDUAL7 MAY
  5GAGE ! S]VICES ( ANO!R P]SON 6"UTAKE
  VIRTU,Y ALL (! "W ASSOCIAT$ )! F>M+
  ACTIVITIES 7CU/OM "W+71 ! F>M PROP]TY
  MAY / 2 3SID]$ 6H BE5 US$ 0! [N] 9 !
  BUSI;S ( F>M+ = PURPOSES (         #BJ
             ,,IT-#CDI;,R#C          D#D
  SUBSEC;N #GJ7#I7 OR #GJ7#I.A7 ": T
  [N]1 6! EXT5T T ! CIRCUM/.ES (!
  "PICUL> F>M+ OP],NS ALL[1 EX]CIS$
  G5]AL MANAGE;T & 3TROL (! OV]ALL F>M+
  OP],NS4
#AD4 ,A LESSOR ( F>M PROP]TY IS N 3SID]$
  6BE US+ ! PROP]TY 9 ! BUSI;S ( F>M+4
  ,?US1 ! PROP]TY : IMMLY 2F ! LESSOR'S
  D1? 0 L1S$ 6ANO!R P]SON 79CLUD+ A
  %>ECROPP]7 IS N ELIGI# = TRANSF] OR
  4TRIBU;N "U SUBSEC;N #GJ7#I7 UN.S X 0
  US$ PR9CIP,Y 9 ! BUSI;S ( F>M+ 0A
  LESSEE :O IS ! SP\SE OR * (! LESSOR &
  T P]SON 0 ACTIVELY 5GAG$ 9 ! BUSI;S ON
  A REGUL> & 3T9U\S BASIS4
#AE4 ,! T]M 8%>ECROPP]0 M1NS A F>M] :O
  IS A T5ANT & GIVES A %>E (! CROP 6!
  L&"L 9 LIEU ( R5T4 ,"! MAY 2 O!R TYPES
  ( %>+ >RANGE;TS1 = EXAMPLE1 ": AN
  9DIVIDUAL IS ACTU,Y AN EMPLOYEE (! F>M
  [N] & N A T5ANT & RCVS A %>E (! CROP Z
  REMUN],N = S]VICES R5D]$4 ,"U S* AN
  >RANGE;T ! F>M PROP]TY MAY 2 ELIGI# =
                                     #BA
             ,,IT-#CDI;,R#C          E#D
  TRANSF] OR 4TRIBU;N "U SUBSEC;N
  #GJ7#I74

    ,ACTIVELY ,5GAG$ ON A ,REGUL> &
             ,3T9U\S ,BASIS
    
#AF4 ,SUBSEC;N #GJ7#I7 &! DEF9I;NS 9
  SUBSEC;N #GJ7#AJ7 ( 8%>ES (! CAPITAL
  /OCK (A FAMILY F>M CORPOR,N0 & 89T]E/
  9 A FAMILY F>M "PN]%IP0 REQUIRE T A
  P]SON 2 8ACTIVELY 5GAG$ ON A REGUL> &
  3T9U\S BASIS0 9 ! BUSI;S ( F>M+4 ,:E!R
  A P]SON IS 8ACTIVELY 5GAG$ ON A REGUL>
  & 3T9U\S BASIS0 IS A "Q ( FACT2 H["E1
  X IS 3SID]$ T ! REQUIRE;T IS MET :5 !
  P]SON IS 8ACTIVELY 5GAG$0 9 ! MANAGE;T
  &/OR "D 6"D ACTIVITIES (! F>M+ BUSI;S4
  ,ORD9>ILY ! P]SON WD 2 EXPECT$
  63TRIBUTE "T1 LAB\R & ATT5;N 6! BUSI;S
  6A SU6ICI5T EXT5T T S* 3TRIBU;NS WD 2
  DET]M9ANT 9 ! SU3ESS;L OP],N (!
  BUSI;S4 ,:E!R AN ACTIV;Y IS 5GAG$ ON A
  8REGUL> & 3T9U\S BASIS0 IS AL A "Q (
  FACT B AN ACTIV;Y T IS 9FREQU5T    #BB
             ,,IT-#CDI;,R#C          F#D
  OR ACTIVITIES T >E FREQU5T B "UTAK5 AT
  IRREGUL> 9T]VALS WD N MEET !
  REQUIRE;T4

     ,O3URR;ES Z A ,3SEQU;E ( ,D1?
    
#AG4 ,SUBSEC;N #BDH7#H7 EXP&S ! USUAL
  M1N+ ( TRANSF]S ( PROP]TY Z A 3SEQU;E
  (! D1? (A TAXPAY] OR ! TAXPAY]'S SP\SE
  =! PURPOSES (! ,ACT4 ,X PROVIDES T A
  TRANSF]1 4TRIBU;N OR ACQUISI;N (
  PROP]TY W 2 3SID]$ 6H O3URR$ Z A
  3SEQU;E (! D1? (A TAXPAY] OR !
  TAXPAY]'S
--------------------------------------#E
  SP\SE ": S* TRANSF]1 4TRIBU;N OR
  ACQUISI;N 0 MADE
  7A7 "U1 OR Z A 3SEQU;E (1 ! T]MS (A W
    OR O!R TE/A;T>Y 9/RU;T (! TAXPAY] OR
    (! TAXPAY]'S SP\SE1
  7B7 Z A 3SEQU;E (! LAW GOV]N+ !
    9TE/ACY (! TAXPAY] OR (! TAXPAY]'S
    SP\SE1 OR
                                     #BC
             ,,IT-#CDI;,R#C          A#E
  7C7 Z A 3SEQU;E (A 4CLAIM]1 REL1SE OR
    SURR5D] 0A B5EFICI>Y "U A W1 O!R
    TE/A;T>Y 9/RU;T OR ON ! 9TE/ACY (A
    TAXPAY] OR ! TAXPAY]'S SP\SE4
  ,SUBSEC;N #BDH7#H7 AL PROVIDES T ": A
  B5EFICI>Y "U A W1 O!R TE/A;T>Y 9/RU;T
  OR ON ! 9TE/ACY (A TAXPAY] REL1SES OR
  SURR5D]S ANY PROP]TY T 0 PROP]TY (!
  TAXPAY] IMMLY 2F ! TAXPAY]'S D1?1 S*
  REL1SE OR SURR5D] W N 2 3SID]$ 6BE A
  4POSI;N ( T PROP]TY 0! B5EFICI>Y4
#AH4 ,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 ! 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 =!   #BD
             ,,IT-#CDI;,R#C          B#E
  PURPOSES ( SUBSEC;NS #GJ7#I71 7#I.A71
  7#I.B7 & 7#I.C74 ,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 ,= ANY (! SUBSEC;NS
  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/.ES 7SEE P>AGRAPH #CB 2L74

  ,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 B5EFITT$ _H !
  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
                                     #BE
          ,DEPRECIA# ,PROP]TY        C#E
    
#AI4 ,SUBSEC;N #GJ7#AC7 PROVIDES T C]TA9
  ADJU/;TS PREVI\SLY MADE 6! CAPITAL CO/
  ( DEPRECIA# PROP]TY (A PRESCRIB$ CLASS
  "U SUBSEC;N #AC7#G7 D N APPLY =!
  PURPOSES ( SEC;N #GJ4 ,^! ADJU/;TS "U
  SUBSEC;N #AC7#G7 PROVIDE T ! CAPITAL
  CO/ ( DEPRECIA# PROP]TY MAY 2 LIMIT$
  6AN AM.T T IS LESS ?AN ! FAIR M>KET
  VALUE 9 CASES ": A NON-9COME PRODUC+
  DEPRECIA# PROP]TY 2G9S 6BE US$ =
  PRODUC+ 9COME1 ": ! 9COME PRODUC+ USE
  (A DEPRECIA# PROP]TY 9CR1SES & ": "!
  IS A NON->M'S L5G? ACQUISI;N (A
  DEPRECIA# PROP]TY4 ,! CAPITAL CO/ 6A
  DEC1S$ TAXPAY] ( DEPRECIA# PROP]TY
  A6ECT$ 0! ADJU/;TS IS READJU/$ =!
  PURPOSES ( DET]M9+ ! PROCE$S ( 4POSI;N
  ( T PROP]TY 9 P>AGRAPHS #GJ7#I77B7 &
  #GJ7#I.A77B74
#BJ4 ,SUBSEC;N #GJ7#AD7 G5],Y PROVIDES
  T1 ": TWO OR M DEPRECIA# PROP]TIES (A
  PRESCRIB$ CLASS >E 4POS$ ( AT ! SAME
  "T 2C (A TAXPAY]'S D1?1 SEC;N      #BF
             ,,IT-#CDI;,R#C          D#E
  #GJ &! DEF9I;N ( 8CO/ AM.T0 APPLY Z IF
  EA* PROP]TY 7 4POS$ ( 9 ! ORD]
  DESIGNAT$ 0! TAXPAY]'S LEGAL
  REPRES5TATIVE OR ! TRU/1 ": SUBSEC;N
  #GJ7#I.A7 APPLIES4 ,": NO S* DESIGN,N
  IS MADE 9 ! APPROPRIATE 9COME TAX
  RETURN1 ! ,M9I/] MAY DESIGNATE ! ORD]4

  ,! ABIL;Y 6DESIGNATE ! ORD] ( 4POSI;N
  2COMES RELEVANT ": "S PROP]TY (A
  PRESCRIB$ CLASS C 2 TRANSF]R$ 6A
  B5EFICI>Y AT ! CO/ AM.T (! PROP]TY
  :ILE O!R PROP]TY M/ 2 4POS$ ( AT FAIR
  M>KET VALUE4 ,= EXAMPLE ASSUME T
  --A DEC1S$ TAXPAY] _H TWO DEPRECIA#
    PROP]TIES 9 A PRESCRIB$ CLASS1
  --! PROP]TIES 7 US$ PR9CIP,Y 9 !
    BUSI;S ( F>M+1
  --"O (! PROP]TIES 0 2QU1!D 6!
    TAXPAY]'S * :ILE ! O!R 0 2QU1!D 6A
    FAMILY FR1
  --EA* PROP]TY _H A CO/ ( 4#A1JJJ & _H
    A FAIR M>KET VALUE ( 4#HJJ IMMLY 2F
    ! DEC1S$'S D1? &                 #BG
             ,,IT-#CDI;,R#C          E#E
  --! UNDEPRECIAT$ CAPITAL CO/ (! CLASS
    0 4#A1BJJ4
  ,IF ! PROP]TY T 0 2QU1!D 6! * IS
  DESIGNAT$ Z 2+ ! F/ "O 4POS$ (1
  PURSUANT 6SUBSEC;N #GJ7#I71 ! DEC1S$
  IS DEEM$ 6H RCVD PROCE$S ( 4POSI;N
  EQUAL 6! LESS] (! CAPITAL CO/ &! CO/
  AM.T (! PROP]TY4 ,S9CE ! CAPITAL CO/
  (! PROP]TY IS 4#A1JJJ &1 PURSUANT 6!
  DEF9I;N 9 SUBSEC;N #BDH7#A71 ! CO/
  AM.T (! PROP]TY IS 4#FJJ1 ! TAXPAY]'S
  UNDEPRECIAT$ CAPITAL CO/ (! PROP]TY 9
  ! CLASS W 2 REDUC$ 64#FJJ 74#A1BJJ
  M9US 4#FJJ7 FOLL[+ ! 4POSI;N 6! *4 ,:5
  ! REMA9+ PROP]TY IS 4POS$ ( 6! FAMILY
  FR1 PURSUANT 6P>AGRAPH #GJ7#E77A71 !
  DEC1S$ IS DEEM$ 6H RCVD PROCE$S (
  4POSI;N EQUAL 6! FAIR M>KET VALUE (!
  PROP]TY1 T IS1 4#HJJ4 ,Z !
  UNDEPRECIAT$ CAPITAL CO/ 9 ! CLASS IS
  4#FJJ1 "! W 2 A RECAPTURE ( CAPITAL
  CO/ ALL[.E ( 4#BJJ4

                                     #BH
             ,,IT-#CDI;,R#C          F#E
  ,IF ! PROP]TY T 0 2QU1!D 6! FAMILY FR
  IS DESIGNAT$ Z 2+ ! F/ "O 4POS$ (1
  PURSUANT 6P>AGRAPH #GJ7#E77A71 !
  DEC1S$ IS DEEM$ 6RCV PROCE$S ( 4POSI;N
  EQUAL 6! FAIR M>KET VALUE (! PROP]TY1
  T IS 4#HJJ4 ,? REDUCES ! CO/ AM.T1 T
  IS1 ! UNDEPRECIAT$ CAPITAL CO/ 9 !
  CLASS1 64#DJJ4 ,:5 ! REMA9+ PROP]TY IS
  4POS$ ( 6! *1 PURSUANT TO
--------------------------------------#F
  SUBSEC;N #GJ7#I71 ! DEC1S$ IS DEEM$ 6H
  RCVD PROCE$S ( 4POSI;N EQUAL 6! LESS]
  (! CAPITAL CO/ &! CO/ AM.T (! PROP]TY4
  ,Z ! CO/ AM.T IS ! LESS] AM.T "! IS NO
  RECAPTURE ( CAPITAL CO/ ALL[.E4 ,H["E1
  PURSUANT 6P>AGRAPH #GJ7#I77C71 !
  CAPITAL CO/ (! PROP]TY 6! TAXPAY]'S *
  IS DEEM$ 6BE 4#A1JJJ &! * IS DEEM$ 6H
  TAK5 CAPITAL CO/ ALL[.E ON ! PROP]TY (
  4#FJJ4 ,?US1 :ILE "! IS NO IMM
  RECAPTURE ( CAPITAL CO/ ALL[.E1 !
  RECAPTURE HAS N BE5 AVOID$ B R DEF]R$
  UNTIL ! * 4POSES (! PROP]TY4
                                     #BI
          ,PROP]TY ,DEPRECIA#        A#F
         ,PURSUANT 6,"P ,,XVII
    
#BA4 ,! ROLLOV]S "U SUBSEC;NS #GJ7#I7 &
  #GJ7#I.A7 = DEPRECIA# F>M PROP]TY
  APPLY ONLY 6DEPRECIA# PROP]TY (A
  PRESCRIB$ CLASS4 ,SUBJECT 6P>AGRAPH
  #BF 2L1 PROP]TY ON : A TAXPAY] IS
  CLAIM+1 OR HAS CLAIM$1 CAPITAL CO/
  ALL[.E ONLY "U ,"P ,,XVII (! ,REGUL,NS
  WD "!=E N QUALIFY =A ROLLOV] "U
  SUBSEC;N #GJ7#I74 ,SIMIL>LY1 ": A
  SP\SE TRU/ IS CLAIM+1 OR HAS CLAIM$1
  CAPITAL CO/ ALL[.E ONLY "U ,"P ,,XVII
  2F TRANSF] OR 4TRIBU;N ( S* PROP]TY F
  T SP\SE TRU/ 6A * ^U ! D1? (!
  SETTLOR'S SP\SE1 T PROP]TY WD N
  QUALIFY =A ROLLOV] "U SUBSEC;N
  #GJ7#I.A74 ,": ! A=EM5;N$ ROLLOV]
  PROVI.NS D N APPLY1 P>AGRAPH
  #GJ7#E77A7 WD DEEM S* PROP]TY HELD 0A
  TAXPAY] IMMLY 2F D1? 6BE 4POS$ ( AT XS
  FAIR M>KET VALUE AT T "T & P>AGRAPH
  #GJ7#E77B7 WD DEEM T SAME PROP]TY 6BE
  ACQUIR$ 0ANY TRANSF]EE1 9CLUD+ !   #CJ
             ,,IT-#CDI;,R#C          B#F
  TAXPAY]'S *1 AT T SAME AM.T4 ,9 ! CASE
  ( ,"P ,,XVII PROP]TY HELD 9 A SP\SE
  TRU/ AT ! "T ! SP\SE B5EFICI>Y DIES1 !
  PROVI.NS ( SUBSEC;N #AJG7#B7 9 3JUNC;N
  ) P>AGRAPH 7F7 (! DEF9I;N ( 8CO/ AM.T0
  9 SUBSEC;N #BDH7#A7 WD APPLY 6DEEM S*
  PROP]TY 6BE 4POS$ ( AT XS CO/ AM.T 6!
  TRU/ IMMLY 2F XS 4TRIBU;N 6! SURVIV+
  B5EFICI>IES & 6BE ACQUIR$ 0^?
  B5EFICI>IES1 9CLUD+ *N1 AT T CO/ AM.T
  PLUS ANY ADJU/;T "!TO PURSUANT
  6P>AGRAPH #AJG7#B77B74 ,NEI SUBSEC;N
  #AJD7#D7 NOR SUBSEC;N #AJD7#E7
  PROVIDES =! DEEM$ 4POSI;N ( ,"P ,,XVII
  PROP]TY 0A TRU/4
#BB4 ,SUBSEC;N #BJ7#B7 (! ,,ITAR
  E6ECTIVELY PROVIDES T CAPITAL CO/
  ALL[.E CLAIM$ "U ,"P ,,XI (! ,REGUL,NS
  ON PROP]TY ACQUIR$ 2F #AIGB IS
  RECAPTURA# :ILE CAPITAL CO/ ALL[.E
  CLAIM$ "!ON "U ,"P ,,XVII IS N UN.S
  ANY PROP]TY T CD H BE5 9CLUD$ "U ,"P
  ,,XVII HAS BE5 9CLUD$ 9 A CLASS "U ,"P
  ,,XI4 ,FUR!R1 ,"P ,,XVII PROP]TY   #CA
             ,,IT-#CDI;,R#C          C#F
  : IS TRANSF]R$ OR 4TRIBUT$ 6A * OR
  TRU/ AF #AIGA & IS DEPRECIA# PROP]TY
  (! TRANSF]EE IS REQUIR$ 6BE 9CLUD$ 9 A
  PRESCRIB$ CLASS "U ,"P ,,XI (!
  ,REGUL,NS 0! TRANSF]EE1 S9CE PROP]TY
  ACQUIR$ AF #AIGA MAY N 2 DEPRECIAT$
  PURSUANT 6,"P ,,XVII (! ,REGUL,NS4
#BC4 ,=A DEC1S$ TAXPAY]1 ANY CAPITAL
  GA9S ON ,"P ,,XVII PROP]TY1 EXCEPT !
  POR;N A3RU$ 2F ,DECEMB] #CA1 #AIGA
  7EXEMPT 0SUBSEC;N #BJ7#A7 (! ,,ITAR71
  M/ 2 REPORT$ 9 ! YE> ( D1? S9CE
  P>AGRAPH #GJ7#E77A7 DEEMS ! TAXPAY] 6H
  4POS$ ( T PROP]TY IMMLY 2F D1?4
#BD4 ,=A SP\SE TRU/ T 4TRIBUT$ ,"P
  ,,XVII PROP]TY 6SURVIV+ B5EFICI>IES1
  9CLUD+ *N1 ON ! D1? (! SP\SE1 "! W 2
  NO CAPITAL GA9S 6! TRU/ AT ! "T !
  PROP]TY IS 4TRIBUT$ 2C S* PROP]TY IS
  DEEM$ 6BE 4POS$ ( "U SUBSEC;N #AJG7#B7
  AT XS CO/ AM.T4
#BE4 ,SUBSEC;N #BJ7#A7 (! ,,ITAR W
  OP]ATE 6PRES]VE ! TAX-FREE /ATUS (A
  PRE-#AIGB CAPITAL GA91 IF ANY1     #CB
             ,,IT-#CDI;,R#C          D#F
  6A * :O HAS AF #AIGA ACQUIR$ ,"P
  ,,XVII PROP]TY F A SP\SE TRU/ : 9 TURN
  ACQUIR$ ! PROP]TY 2F #AIGB & [N$ !M
  )\T 9T]RUP;N F ,DECEMB] #CA1 #AIGA1
  UNTIL ! DATE ( 4POSI;N 6! *4 ,SUBSEC;N
  #BJ7#A7 (! ,,ITAR W AL PRES]VE ! TAX-
  FREE /ATUS (A PRE-#AIGB CAPITAL GA9 ON
  ,"P ,,XVII PROP]TY ACQUIR$ AF #AIGA EI
  0A SP\SE OR A SP\SE TRU/ F A TAXPAY]
  7SETTLOR74 ,H["E1 ? PROVI.N W N
  PRES]VE ! TAX-FREE /ATUS (A PRE-#AIGB
  CAPITAL GA9 ON ,"P ,,XVII PROP]TY
  ACQUIR$ AF #AIGA 0A * ON ! D1? (A
  P>5T1 2C :5 SUBSEC;N #GJ7#E7 APPLIES
  ON ! TRANSF]1 SUBSEC;N #BJ7#A7 (!
  ,,ITAR DOES N APPLY DUE 6! EXCEP;N 9
  P>AGRAPH #BJ7#A77B7 (! ,,ITAR 7SEE AL
  ! CURR5T V].N ( ,,IT-#BAG1 ,CAPITAL
  ,PROP]TY ,[N$ ON ,DECEMB] #CA1 #AIGA--
  ,DEPRECIA# ,PROP]TY74
#BF4 ,NOT)/&+ T A L1SEHOLD 9T]E/ 9 F>M
  L& 79CLUD+ A GRAZ+ L1SE7 ACQUIR$ 2F
  #AIGB1 ON : CAPITAL CO/ ALL[.E HAS BE5
  CLAIM$ ONLY "U ,"P ,,XVII (!       #CC
             ,,IT-#CDI;,R#C          E#F
  ,REGUL,NS 2F A TAXPAY]'S D1? OR 2F !
  TRANSF] ( S* PROP]TY 0A SP\SE TRU/ 6A
  *1 IS TE*NIC,Y N DEPRECIA# PROP]TY (A
  PRESCRIB$ CLASS1 ! ,DE"P;T W N"E!.S
  A3EPT X Z QUALIFY+ =A ROLLOV] "U
  SUBSEC;NS #GJ7#I7 & #GJ7#I.A7 IF !
  TAXPAY]S 9VOLV$ OR _! REPRES5TATIVES S
  SIGNIFY 9 WRIT+4

         ,,ITAR ,PROVI.NS--,L&
    
#BG4 ,": SUBSEC;N #GJ7#I7 APPLIES 6A
  TRANSF] ( L& T 0 [N$ 0! TAXPAY] ON
  ,DECEMB] #CA1 #AIGA 7OR T 0 [N$ ON
  ,JUNE #AH1 #AIGA1 0A P]SON :O DID N
  D1L AT >M'S L5G? )! TAXPAY] & NO >M'S
  L5G? [N]S 9T]V5$ 6! DATE ( S*
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