CRA confirms that a part disposition of a partnership interest results in an anomalous pro rata reduction in the partner’s at-risk amount for the year of disposition

If a taxpayer disposes of all of its limited partnership interest partway through the partnership year but is allocated a partnership loss for that year, its full partnership ACB before the disposition can be taken into account (by virtue of s. 96(1.01)) in computing its at-risk amount at the end of that year, so that it would typically be able to deduct that loss against its other sources of income.

In contrast, if it instead disposes of most but not all of its partnership interest, there will be an immediate pro rata reduction in the ACB of its partnership interest, so that its at-risk amount at the end of the partnership year, and the deductible amount of the loss, will be correspondingly reduced.  CRA notes that "no legislative provision alters this result."

Neal Armstrong. Q. 16 of 9 October 2015 APFF Roundtable under 2015 APFF Conference.