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

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,capital ,co/ ,all[.e--,"pial
  ,4posi;ns ( ,prop]ty
,numb]3 ,,it-#dah
,date3 ,june #bf1 #aigh
,ref];e3 ,subsec;n #ac7#ba7 7al sec;n
  #dc subsec;n #ac7#a7 & subp>agraph
  #ed7a77;i77

#a4 ,sec;n #dc (! ,act provides t1 =!
  purpose ( -put+ ! ga9 or loss f !
  4posi;n ( "p (a prop]ty1 ! adju/$ co/
  base 7,,acb7 (! :ole prop]ty immly
  prior 6! 4posi;n m/ 2 appor;n$ on a
  r1sona# basis 2t ! "p 4pos$ (&! "p
  reta9$4 ,a 4posi;n ( "p (a prop]ty may
  ref] ei 6! 4posi;n (a physical "p (!
  prop]ty or 6! 4posi;n ( an undivid$
  9t]e/ "!94 ,": ! prop]ty is deprecia#
  prop]ty1 subp>agraph #ed7a77;i7     #a
               ,,it-#dah             a#a
  def9es ! adju/$ co/ base 6m1n !
  capital co/ (! prop]ty b makes no
  provi.n = adju/;ts "!to "u sec;n #ec4
  ,subsec;n #bdh7#a7 9dicates t !
  def9i;n 9 subp>agraph #ed7a77;i7
  applies = all purposes (! ,act4 ,!
  det]m9,n ( capital co/ 9 v>i\s
  circum/.es is expla9$ 9 ,,it-#agd
  8,capital ,co/ ,all[.e--,m1n+ (
  8,capital ,co/ ( ,prop]ty004
#b4 ,": a taxpay] 4poses ( only "p (a
  deprecia# prop]ty (a prescrib$ class
  7o!r ?an a timb] res\rce prop]ty z
  def9$ 9 p>agraph #ac7#ba77d4#a771 !
  capital co/ (! "p 4pos$ ( m/ 2 det]m9$
  =! purpose ( clause
  #ac7#ba77f77;iv77,b71 9 ord] 6det]m9e
  ! am.t ( any recaptur$ depreci,n "u
  subsec;n #ac7#a7 &! undepreciat$
  capital co/ (! prop]ty rema9+ 9 !
  class "u p>agraph #ac7#ba77f74
  ,6a3ompli% ?1 x is ! ,de"p;t's view t
  ! appor;n;t rule 9 sec;n #dc %d 2 us$4
  ,h["e1 no reduc;n (! capital co/    #b
               ,,it-#dah             b#a
  ref]r$ 6in subp>agraph #ac7#ba77f77;i7
  w 2 requir$ z a result (a "pial
  4posi;n1 s9ce t p>agraph ref]s 6!
  capital co/ ( all deprecia# prop]ty 9
  a prescrib$ class t has be5 acquir$ 2f
  ! "t ! undepreciat$ capital co/ is
  calculat$4 ,? wd 9clude prop]ty t has
  previ\sly be5 4pos$ ( 9 :ole or 9 "p4
#c4 ,! foll[+ illu/rates ! applic,n (!
  pr9ciples 9 #b abv 9 a situ,n ": !
  taxpay] 4poses (a physical "p (a
  deprecia# prop]ty 7o!r ?an a timb]
  res\rce prop]ty7 &! capital co/ (! "p
  4pos$ (&(! "p reta9$ is asc]ta9a# )
  a3uracy4
--------------------------------------#b
,example3
  ,assume a taxpay] )a fiscal p]iod 5d+
  ,may #ca1 has a deprecia# prop]ty : is
  ! sole prop]ty ( xs class4 ,! capital
  co/ all[.e s*$ule z ( ,may #ca1 #aigg1
  %[s3

                                      #c
               ,,it-#dah             a#b
,capital co/ (
  prop]ty 9 ! class1
  acquir$ af
  ,decemb] #ca1
  #aiga """""""""""" 4#ae1jjj
less3 ,total
  depreci,n all[$   74#aj1jjj7
,undepreciat$
  capital co/ (!
  class """"""""""""" 4#e1jjj

  7a7 ,on ,june #a1 #aigg1 ! taxpay]
    sells "o-half (! prop]ty = 4#ag1jjj4
    ,! capital co/ (! "p 4pos$ ( is "kn
    6be #ej@3p (! capital co/ (! :ole
    prop]ty immly 2f ! sale4
  
    ,! capital ga9 on ! date ( sale &!
    undepreciat$ capital co/ z well z
    any recaptur$ depreci,n at ! ye> 5d
    wd 2 calculat$ z foll[s3
  

                                      #d
               ,,it-#dah             b#b
    7;i7 ,calcul,n ( ,capital
      ,ga9

,proce$s ( 4posi;n1 ,june #a1
  #aigg """"""""""""""""""""""" 4#ag1jjj
less3
,capital co/ ( "p
  sold immly 2f
  4posi;n 7,sec;n
  #dc7 """"""""""""""" 4#g1ejj
,sell+ exp5ses """"""" 4#a1jjj   4#h1ejj
,capital ga9
  7p>agraph
  #ci7#a77a77 """""""""""""""""" 4#h1ejj

    7;ii7 ,calcul,n (
      recaptur$ depreci,n &
      ,u4,c4,c4 z at ,may #ca1
      #aigh

,capital co/ ( all prop]ty 9
  class 7#ac7#ba77f77;i77 """"" 4#ae1jjj

                                      #e
               ,,it-#dah             c#b
,recaptur$ depreci,n 9 previ\s
  tax,n ye>s
  7#ac7#ba77f77;ii77 """"""""""""" ,,nil
 """""""""""""""""""""""""""""" 4#ae1jjj
less3
,total depreci,n
  all[$ prior 6ye>
  5d
  7#ac7#ba77f77;iii7  4#aj1jjj
,proce$s ( all
  4posi;ns prior
  6ye> 5d
  74#ag1jjj m9us
  4#a1jjj7 """ 4#af1jjj
,capital co/ (
  "p ( prop]ty
  sold 7,sec;n
  #dc7 """""""" 4#g1ejj
,! less] (! two
  7#ac7#ba77f7
  7;iv77 """"""""""""" 4#g1ejj  4#ag1ejj
,recaptur$ depreci,n
  7#ac7#a77 """""""""""""""""" 74#b1ejj7
                                      #f
               ,,it-#dah             d#b
,u4,c4,c4 ( class
  7#ac7#ba77f77 """""""""""""""""" ,,nil

,transcrib]'s note3
  7,page #d1 is ,fr5* page7
--------------------------------------#d
  7b7 ,on ,july #a1 #aigh1 ! taxpay]
    sells ! rema9+ "o-half (! prop]ty =
    4#ah1jjj4 ,! capital co/ (! rema9+
    "p1 p] 7a7 abv1 is #ej@3p (! capital
    co/ (! :ole prop]ty4
  
    ,! capital ga9 on ! date ( sale &!
    undepreciat$ capital co/ z well z
    any recaptur$ depreci,n at ! ye> 5d
    wd 2 calculat$ z foll[s3
  
    7;i7 ,calcul,n ( ,capital ,ga9

,proce$s ( 4posi;n1 ,june #a1
  #aigh """"""""""""""""""""""" 4#ah1jjj
less3
,capital co/ ( "p
  sold immly 2f                       #g
               ,,it-#dah             a#d
  4posi;n 7,sec;n
  #dc7 """"""""""""""" 4#g1ejj
,sell+ exp5ses """"""" 4#a1bjj   4#h1gjj
,capital ga9
  7p>agraph
  #ci7#a77a77 """""""""""""""""" 4#i1cjj

    7;ii7 ,calcul,n ( recaptur$
      depreci,n & ,u4,c4,c4 z at ,may
      #ca1 #aigi
    
,capital co/ ( all prop]ty 9
  class 7#ac7#ba77f77;i77 """"" 4#ae1jjj
,recaptur$ depreci,n 9 previ\s
  tax,n ye>s
  7#ac7#ba77f77;ii77 """"""""""" 4#b1ejj
 """""""""""""""""""""""""""""" 4#ag1ejj
less3
,total depreci,n
  all[$ prior 6ye>
  5d
  7#ac7#ba77f77;iii7  4#aj1jjj
,proce$s ( all
  4posi;ns prior                      #h
               ,,it-#dah             b#d
  6ye> 5d
  74#ce1jjj less
  total ( sell+
  exp5ses
  74#b1bjj7 "" 4#cb1hjj
,capital co/ (
  bo? "ps sold
  7,sec;n #dc7 4#ae1jjj
,! less] (! two
  7#ac7#ba77f7
  7;iv77 """""""""""" 4#ae1jjj  4#be1jjj
,recaptur$ depreci,n
  7#ac7#a77 """""""""""""""""" 74#g1ejj7
,u4,c4,c4 ( class
  7#ac7#ba77f77 """""""""""""""""" ,,nil

,transcrib]'s ,note3
  7,page #e1 is fr5* page7
--------------------------------------#f
#d4 ,9 ! foll[+ p>agraphs1 ! applic,n (!
  pr9ciples 9 #b abv is 3sid]$ = situ,ns
  ": ! taxpay] 4poses ( "p (a deprecia#
  prop]ty 7o!r ?an a timb] res\rce
  prop]ty7 &! capital co/ (! "p       #i
               ,,it-#dah             a#f
  4pos$ ( _c 2 asc]ta9$ ) a3uracy4 ,": ?
  is s1 sec;n #dc m]ely requires t !
  attribu;n (a por;n (! capital co/ (!
  :ole prop]ty 6! "p sold m/ 2 r1sona#4
#e4 ,": ! value ( di6]5t "ps (! same
  prop]ty c 2 asc]ta9$1 "o me?od t cd 2
  us$ 6det]m9e ! capital co/ (! "p sold
  is 6take t propor;n (! capital co/ (!
  :ole prop]ty t ! am.t or value (!
  3sid],n =! "p 4pos$ ( 72f ! deduc;n (
  sell+ exp5ses7 is (! am.t abv plus !
  fair m>ket value at ! date ( 4posi;n
  (! "p reta9$4

,example3
  ,a taxpay] 4pos$ (a "p (a deprecia#
  prop]ty acquir$ af ,decemb] #ca1
  #aiga1 = 4#ah1jjj4 ,! capital co/ (!
  :ole prop]ty immly 2f ! 4posi;n 0
  4#db1jjj4 ,a valu,n 0 made (! "p (!
  prop]ty reta9$ on ! date ( 4posi;n (!
  o!r "p4 ,! "p reta9$ 0 valu$ at
  4#ff1jjj4 ,acly1 ! capital co/ (! "p
  4pos$ (= purposes ( clause         #aj
               ,,it-#dah             b#f
  #ac7#ba77f77;iv77,b7 0 4#i1jjj1
  calculat$ z foll[s3

  4#ah1jjj divid$ by 74#ah1jjj plus
  4#ff1jjj7 multipli$ 04#db1jjj equals
  4#i1jjj

#f4 ,! =mula \tl9$ 9 ! prec$+ p>agraph
  =! pro rata appor;n;t (! capital co/
  (a deprecia# prop]ty wd n 2 r1sona# 9
  all circum/.es4 ,":1 = 9/.e1 ! value (
  di6]5t "ps (! same prop]ty _c 2
  asc]ta9$1 x w 2 a "q ( fact z 6:at is
  a r1sona# alloc,n (! capital co/ (!
  :ole prop]ty 6! "p 4pos$ (&! "p
  reta9$4 ,fur!r1 ": ! taxpay]1 2f !
  4posi;n1 _h 9curr$ an exp5diture t 0
  :olly attributa# 6"o specific "p (!
  prop]ty1 x wd 2 unr1sona# 6make ! pro
  rata appor;n;t on ! 4posi;n ( "p (!
  prop]ty1 )\t f/ exclud+ ! am.t ( t
  exp5diture f ! capital co/4 ,hav+ made
  ! appor;n;t1 ! am.t (! exp5diture wd
                                     #aa
               ,,it-#dah             c#f
  !n 2 a4$ back 6! capital co/ (! "p
  4pos$ ( or reta9$1 z ! case may be4

       ,timb] ,res\rce ,prop]ties
            7p>agraphs #g-h7
    
#g4 ,": a taxpay] 4poses ( only a "p (a
  timb] res\rce prop]ty 7z def9$ 9
  p>agraph #ac7#ba77d4#a771 x w n 2 nec
  6apply ! appor;n;t rule ( sec;n #dc4
  ,any ga9 )9 ! m1n+ ( p>agraph
  #dj7#a77a7 : may >ise f s* a 4posi;n
  is n a capital ga9 0r1son (
  subp>agraph #ci7#a77a77;iv71 b is
  subject 6recapture "u subsec;n #ac7#a7
  0virtue ( subp>agraph #ac7#ba77f77;v74
#h4 ,subp>agraph #ac7#ba77,f77;v7
  requires ! am.t (! proce$s1 less sell+
  exp5ses1 ( ea* 4posi;n (a timb]
  res\rce prop]ty or "p "!( 6be deduct$
  f ! capital co/ (! prop]ty 9 ! class4
  ,x foll[s t any negative bal.e 9 !
  class result+ f ! calcul,n "u p>agraph
  #ac7#ba77f7 w 2 9clud$ 9 !         #ab
               ,,it-#dah             d#f
  taxpay]'s 9come =! ye> pursuant
  6subsec;n #ac7#a74





















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