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

              ,9COME ,TAX
          ,9T]PRET,N ,BULLET9
    
,SUBJECT3 ,9COME ,TAX ,ACT
  ,R5TAL ,PROP]TY--,M1N+ ( 8,PR9CIPAL
  ,BUSI;S0
,NUMB]3 ,,IT-#CGA
,DATE3 ,APRIL #BE1 #AIGG
,REF];E3 ,REGUL,N #AAJJ7#AB7 7,AL
  P>AGRAPH #BJ7#A77A77

#A4 ,9T]PRET,N ,BULLET9 ,,IT-#AIE;,R#B1
  8,R5TAL ,PROP]TY--,CAPITAL ,CO/
  ,ALL[.E ,RE/RIC;NS01 DESCRIBES ! E6ECT
  ( ,REGUL,N #AAJJ7#AA7 ^U ! AM.T (
  CAPITAL CO/ ALL[.E CLAIM$ 0A TAXPAY]
  ON 8R5TAL PROP]TY0 Z DEF9$ 0,REGUL,N
  #AAJJ7#AD74 ,? BULLET9 IS 3C]N$ )!
  PROVI.NS ( ,REGUL,N #AAJJ7#AB7 :
  EXCEPTS C]TA9 CORPOR,NS & "PN]%IPS F
  ^? RE/RIC;NS4
                                      #A
               ,,IT-#CGA             A#A
#B4 ,REGUL,N #AAJJ7#AB7 PROVIDES T !
  CAPITAL CO/ ALL[.E RE/RIC;N PRESCRIB$
  0,REGUL,N #AAJJ7#AA7 DOES N APPLY 6A
  TAXPAY] T 0 "?\T ! YE> A LIFE 9SUR.E
  CORPOR,N1 A CORPOR,N ^: PR9CIPAL
  BUSI;S 0 ! L1S+1 R5TAL DEVELOP;T OR
  SALE1 OR ANY -B9,N "!(1 ( R1L PROP]TY
  [N$ 0X1 OR A "PN]%IP EA* MEMB] ( : 0 A
  CORPOR,N DESCRIB$ ABV4 ,? PROVI.N
  APPLIES Z WELL 6NON-RESID5TS Z
  6RESID5TS4
#C4 ,A "PN]%IP QUALIFIES )9 ,REGUL,N
  #AAJJ7#AB7 ONLY IF EA* ( XS MEMB]S IS
  A CORPOR,N DESCRIB$ "!94 ,T IS1 EA*
  CORPORATE MEMB] M/ H BE5 "?\T ! YE>1 A
  LIFE 9SUR.E CORPOR,N OR A CORPOR,N ^:
  PR9CIPAL BUSI;S 0 ! L1S+1 R5TAL1
  DEVELOP;T OR SALE1 OR ANY -B9,N "!(1 (
  R1L PROP]TY [N$ 0X1 IF ! "PN]%IP IS
  6QUALIFY4
#D4 ,A "PN]%IP HAV+ A "PN]%IP Z A MEMB]
  AT ANY "T 9 ! YE> _C QUALIFY "U
  ,REGUL,N #AAJJ7#AB7 EV5 ?"\ T MEMB]
                                      #B
               ,,IT-#CGA             B#A
  QUALIFI$ 2C ALL ( XS MEMB]S W]E1 "?\T
  ! YE>1 QUALIFI$ CORPOR,NS4

           ,PR9CIPAL ,BUSI;S
    
#E4 ,:E!R OR N A BUSI;S IS A 8PR9CIPAL0
  BUSI;S IS A MATT] ( SIGNIFIC.E ONLY ":
  ! TAXPAY] C>RI$ ON M ?AN "O BUSI;S 9 !
  TAX,N YE>4 ,! PHRASE 8PR9CIPAL BUSI;S0
  IS N DEF9$ 0! ,ACT OR ! ,REGUL,NS &
  ACLY ! ^WS M/ 2 GIV5 _! USUAL M1N+ &!
  ID5T;Y (A TAXPAY]'S PR9CIPAL BUSI;S
  DET]M9$ F ! FACTS (! "PICUL> CASE4
--------------------------------------#B
#F4 ,REGUL,N #AAJJ7#AB7 REQUIRES T !
  BUSI;S 2 ! TAXPAY]'S PR9CIPAL BUSI;S
  8"?\T ! YE>04 ,9 ? RESPECT X IS SIMIL>
  6SUBSEC;N #AH7#H7 (! ,ACT B X IS
  UNLIKE O!R REF];ES TO 8PR9CIPAL
  BUSI;S0 9 ! ,ACT 7= EXAMPLE1 SUBSEC;N
  #FF7#B7 & SUBP>AGRAPH
  #ACC7#H77D77;IV77 : ONLY REQUIRE !
  "PICUL> BUSI;S 6H BE5 A PR9CIPAL
  BUSI;S 9 ! TAX,N YE>4 ,N"E!.S X     #C
                ,I-#CGA              A#B
  IS ! ,DE"P;T'S VIEW T ! CRIT]IA =
  ID5TIFY+ A PR9CIPAL BUSI;S =! PURPOSES
  ( ,REGUL,N #AAJJ7#AB7 >E N DI6]5T F ^?
  SET \ 9 ,9T]PRET,N ,BULLET9 ,,IT-#BIJ1
  8,NON-,RESID5T-,[N$ ,9VE/;T ,CORPOR,N
  --,M1N+ ( ,PR9CIPAL ,BUSI;S40
#G4 ,"! IS NO /&>D SET ( CRIT]IA T MAY 2
  LOOK$ 6": ! NATURE ( EA* (A TAXPAY]'S
  BUSI;SES IS "KN B X M/ 2 DET]M9$ : (
  !M IS 8 PR9CIPAL BUSI;S2 ! SIGNIFICANT
  FACTORS ( EA* CASE M/ 2 SE>*$ \ &
  EVALUAT$4 ,9 ! ,DE"P;T'S VIEW ! FOLL[+
  >E AM;G ! FACTORS : MAY 2 RELEVANT2
  7A7 ! PR(ITS R1LIZ$ 0EA* (! BUSI;SES2
  7B7 ! VOLUME &! VALUE (! GROSS SALES
    OR TRANSAC;NS ( EA* BUSI;S2
  7C7 ! VALUE (! ASSETS ( EA* BUSI;S2
  7D7 ! CAPITAL EMPLOY$ 9 EA* BUSI;S2 &
  7E7 ! "T1 ATT5;N & EF=T EXP5D$ 0!
    EMPLOYEES1 AG5TS OR (FIC]S 9 EA*
    BUSI;S4
#H4 ,AL? ! DET]M9,N ( : (A TAXPAY]'S
  BUSI;SES IS ! PR9CIPAL BUSI;S IS MADE
  9 RESPECT (A "PICUL> TAX,N YE>1 X   #D
                ,I-#CGA              B#B
  IS (T5 NEC 63SID] PATT]NS OV] S"EAL
  YE>S4 ,?US1 IF A "PICUL> BUSI;S HAS
  BE5 ! PR9CIPAL BUSI;S & 9 A "PICUL>
  YE> 7EVALUAT$ 9 ISOL,N F PREC$+ &
  SU3E$+ YE>S7 X FAILS 6SATISFY _M (!
  TE/S1 X DOES N NECESS>ILY FOLL[ T
  ANO!R BUSI;S HAS 2COME ! PR9CIPAL
  BUSI;S 9 T YE>4 ,= EXAMPLE X MAY 2 T1
  2C ( ECONOMIC 3DI;NS & N 2C (A *ANGE 9
  MANAGE;T'S POLICIES1 "! HAS BE5 9 A
  "PICUL> YE> A REDUC;N 9 ! LEVEL (
  ACTIVITIES (! BUSI;S : 0 ! PR9CIPAL
  BUSI;S1 S T ANO!R BUSI;S APPE>S 6H
  ASSUM$ T ROLE4 ,IF ? 3DI;N 3T9UES ONLY
  9 ! %ORT RUN & "!AF ! BUSI;S AG
  SATISFIES ! TE/S ( 2+ ! PR9CIPAL
  BUSI;S1 ! ,DE"P;T'S VIEW IS T !
  PR9CIPAL BUSI;S MAY N H *ANG$ DUR+ T
  P]IOD4 ,:E!R ? IS S 9 ANY "PICUL> CASE
  C ONLY 2 DET]M9$ 0A REVIEW (!
  CIRCUM/.ES ( T CASE4
#I4 ,9T]PRET,N ,BULLET9 ,,IT-#GB;,R#B1
  8,M1N+ ( 8,ACTIVE ,BUSI;S0' 9DICATES !
  ,DE"P;T'S VIEW T A CORPOR,N :       #E
                ,I-#CGA              C#B
  DERIVES 9COME F R5TALS IS 9 ! R5TAL
  BUSI;S & ?US SATISFIES "O (! CRIT]IA (
  ,REGUL,N #AAJJ7#AB74 ,IF X HAS NO O!R
  BUSI;S OR IF X HAS O!R BUSI;SES B !
  R5TAL BUSI;S IS XS PR9CIPAL BUSI;S1 !N
  ! REQUIRE;TS (! ,REGUL,N >E MET1 AL? !
  BUSI;S MAY N SATISFY ! TE/S ( 2+ AN
  ACTIVE BUSI;S4
--------------------------------------#C
#AJ4 ,9 ! ,DE"P;T'S VIEW A P]SON :O
  OP]ATES A HOTEL IS 9 ! BUSI;S (
  PROVID+ S]VICES & N 9 ! R5TAL BUSI;S4
  ,?US A CORPOR,N 9 T BUSI;S DOES N
  QUALIFY "U ,REGUL,N #AAJJ7#AB7 NO
  MATT] T X IS XS PR9CIPAL BUSI;S4
#AA4 8,R1L PROP]TY0 9 ! 3TEXT ( ,REGUL,N
  #AAJJ7#AB7 9CLUDES A REF];E 6BUILD+S :
  >E DEPRECIA# PROP]TY (! TAXPAY] :E!R
  SITUAT$ ON L& [N$ 0HM OR 9 : HE HAS A
  L1SEHOLD 9T]E/4



                                      #F