CRA confirms that a negative ACB gain of an LP will not boost a partner’s CDA
The addition to a private corporation’s capital dividend account does not include any portion of a “negative ACB” gain under s. 40(3.1).
A taxpayer unsuccessfully submitted that a negative ACB gain realized by an upper-tier LP on its units in a lower-tier LP should not be treated, when allocated to the upper-tier LP’s partners, as a s. 40(3.1) gain for CDA purposes. CRA stated that a partnership’s income, when allocated to its partners, “will generally retain its nature and characteristics.”
Neal Armstrong. Summary of 21 June 2017 External T.I. 2016-0678361E5 Tr under s. 89(1) – capital dividend account - s. (a)(i)(A).