Cosentino v. R., [1997] 2 CTC 2477, 97 DTC 1226

Sobier T.C J .:

The Appellant appeals from the assessment by the Minister of National Revenue (the “Minister”) whereby the Minister included in the Appellant’s income for his 1990 taxation year a capital gain of $131,486 (“the capital gain”) or “gain”) arising from the disposition of the Appellant’s interest in a certain real property known as Parcel 15-2 Section Salt 2(c) City of Stoney Creek, Regional Municipality of Hamilton-Wentworth composed of Part of Lot 15, Concession 2, Township of Saltfleet, designated as Parts 1 and 2 on Reference Plan 62R-9084, Land Titles Division of Wentworth (the “Stoney Creek Property”). The entire amount of the gain was included in the Appellant’s income. However, he claims that his spouse had a one-half interest in his 50% interest of the Stoney Creek Property and therefore only one-half of the gain should have been included in his income. The remaining 50% of the Stoney Creek Property was owned by the Appellant’s brother Sam Cosentino or as according to the Appellant by his brother and his brother’s spouse.

The Appellant insists that over the years he and his spouse were equal partners in all of his ventures and produced copies of deeds showing that they took title to properties as joint tenants. In addition, a bank passbook which was stated to be for a joint account shows a deposit of monies purportedly coming from the sale of the Stoney Creek Property.

Title to the Stoney Creek Property was taken in the names of the Appellant and his brother Sam Cosentino as partnership property. As well, there were copies of other land instruments also showing the Appellant and Sam Cosentino owning real property as partnership property. Indeed, in the deed whereby they conveyed the Stoney Creek Property it is stated that the lands were held as partnership property. The Appellant’s spouse executed the deed as a spouse consenting to the transaction and not as a transferor.

In the course of owning the Stoney Creek Property and in attempts to sell or develop it the brothers became embroiled in litigation. The proceeds of settlement received by the Appellant were included in the gain realized by him. However, it is interesting to note that no mention of Mrs. Cosentino as a partner holding an interest in the Stoney Creek Property is made in the documents presented dealing with the claims in the litigation. The claims are those of Mr. Cosentino alone and he alone was the Plaintiff in the action. If, as the Appellant stated, his brother knew that the Appellant’s spouse had an interest in the Stoney Creek Property he surely would have required the spouse to release him from liability alleged in the action in addition to receiving a release signed by the Appellant which he did. In his Statement of Claim the Appellant acknowledges the partnership with his brother in the Stoney Creek Property and no mention is made of any interest of his spouse in it.

In his 1990 tax return the Appellant did not report any amount of the gain.

As a result of Revenue Canada examining the Appellant’s affairs with respect to other matters, his involvement with the Stoney Creek Property was discovered. It was only then that he reported the gain and only then does he claim that his wife was a 25% owner of the whole. He maintains that he forgot about his wife’s 25% interest until one year after the beginning of his problems with Revenue Canada.

While I have no doubt that on certain occasions, the Appellant and his spouse acquired properties jointly, with respect to the Stoney Creek Property I find that she had no interest in it but that it was partnership property held by the Appellant and his brother Sam Cosentino, and that the entire capital gain was properly included in the Appellant’s income for his 1990 taxation year. Accordingly the appeal is dismissed. I make no order as to costs.

Appeal dismissed.