CRA asserts that accrued recapture of depreciation is irrelevant to share valuation

Father transfers his shares of a real estate corporation with substantial accrued recapture of depreciation to his son.

After repeating (albeit, with confused terminology) its uncontroversial position that the assets of a corporation or other taxpayer are to be valued without taking into account deferred tax credits or debits, CRA then made the extraordinary statement:

In the situation provided, the CRA would not accept the latent taxes respecting the assets held by the corporation being considered in the determination of the FMV of the shares of the corporation.

Earlier in the interpretation, CRA referred to "deferred taxes" ("impôts différés"), so that the above statement referring to "latent taxes" ("impôts latents") apparently cannot be rationalized as merely indicating that you ignore the bogus deferred tax (or FITL) balances generated under GAAP.

Neal Armstrong.  Summary of 10 October 2014 APFF Roundtable, Q. 12, 2014-0538121C6 F under General Concepts – FMV – Shares.