Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues:
Treatment of legal costs and possibly losses resulting in sale and recovery of taxi business
Position:
General information provided.
Reasons:
Insufficient information.
XXXXXXXXXX
August 29, 2002
2000-014823
T. Young, CA
Dear XXXXXXXXXX:
Re: Taxi Business
This is in reply to your letter of June 19, 2002, requesting our views on the income tax treatment of the sale of your share of a taxi business and the ensuing legal proceedings.
In your letter, you stated that in XXXXXXXXXX you sold your half of your taxi business. After XXXXXXXXXX months, your partner took the taxi. This was followed by litigation that resulted in you recovering the taxi. You have asked us how to report the costs associated with these events on your income tax return.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings (enclosed), dated May 17, 2002. Moreover, your situation appears to involve a number of complex income tax issues, which can only be determined by examining all of the relevant documentation, especially any documents relating to the sale of the business and all documents relating to the ensuing legal proceedings.
In light of the complexity of the legal and tax issues involved in the above situation, we suggest that you contact a tax advisor for assistance. We have enclosed the following interpretation bulletins, which may be of assistance to you:
? IT-99R5 (Consolidated) - Legal and Accounting Fees
? IT-505 - Mortgage Foreclosures and Conditional Sales Repossessions
? IT-159R3 - Capital debts established to be bad debts
We regret that we cannot be of further assistance.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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