The Joint Committee suggests that there are preferred approaches for the inevitable Finance response to Green
The Joint Committee has suggested that, under the Finance response to Green (respecting the flow-through of lower-tier LP losses to upper-tier partners), there be an ability to carry over unused limited partnership losses to future years in which the upper-tier partnership has an at-risk amount respecting the lower-tier partnership. For example, a provision could be added to allow partnerships to claim a deduction in computing their income in circumstances similar to where a taxpayer is allowed a deduction in computing taxable income under s. 111(1)(e).
Although s. 40(3.12) is intended to address the problem of negative ACB arising from interim distributions before ACB is increased by year-end income, it is not an ideal solution. The Committee suggests that the s. 40(3.111) relief accorded to professional partnerships be extended.