Income Tax Severed Letters - 1998-03-20

Principal Issues:

Whether, given the ordering rule of paragraph 80(2)(c), a debtor can apply the remaining unapplied portion of the forgiven amount to depreciable properties and cumulative eligible capital in any order.

Position:

Although paragraph 80(2)(c) provides an ordering rule, certain reductions of tax attributes, such as reductions with respect to depreciable properties and cumulative eligible capital, are optional.

Reasons:

Principal Issues:

Whether status Indian employees of a corporation are exempt from income tax.

Position:

Question of Fact

Reasons:

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

J. Gibbons
XXXXXXXXXX 971375

Attention: XXXXXXXXXX

March 6, 1998

Dear Sir:

Principal Issues:

Whether a portion of the employment income of an Indian for the retroactive period he was not working should be exempt from tax.

Position:

Yes

Reasons:

Principal Issues:

1) Can a taxpayer make a gift of publicly traded securities to a registered charity and request that the charity consider the total value of the securities to represent capital contributed for the purchase of a charitable gift annuity?

2) Can a registered charity accept any form of capital other than cash towards the purchase of a charitable gift annuity?

3) If a registered charity can accept publicly traded shares as payment for the charitable gift annuity, would the amount of the taxable capital gains be used to determine the value of the donation?

Position:

In the particular situation, there has not been a gift of the publicly traded shares. However, where a taxpayer uses publicly traded shares to purchase an annuity from a registered charity, we would consider that there has been a gift equal to the excess of the fair market value of the shares over the total amount of the annuity payments expected to be received by the donor, pursuant to IT-111R2. In a situation where a donor uses publicly traded shares to purchase an annuity from a registered charity, the donor cannot make an election under subsection 118.1(6), because technically there is no “gift”.

Reasons:

Principal Issues:

Withholding requirements on the reimbursement of legal fees in wrongful dismissal cases.

Position:

There are no withholding requirements with respect to reimbursements of legal fees described in paragraph 56(1)(l.1). Appropriate withholdings required for reimbursement of legal fees included in income by virtue of 6(1)(j). However administrative policy to waive the withholding requirements if the reimbursement is deductible under 8(1)(b).

Reasons:

Principal Issues:

Whether the computation of income of a member of a partnership is dependent on amounts paid to the member by the Partnership.

Position:

No. Amounts paid or distributed to a partner by a partnership are a method of distributing the income of the partnership. For income reporting purposes by the member, the member's share of the partnership income for a fiscal period must be reported by the member for his/her taxation year in which the fiscal year ends, whether or not any amount of the partnership's income is received or receivable by the member.

Reasons:

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

		980365
XXXXXXXXXX	B. Kerr

Attention: XXXXXXXXXX

February 17, 1998

Dear Sirs:

Re: Entertainment Expenses at Golf Clubs

This is further to our letter of November 10, 1997, regarding the deductibility of entertainment expenses at a golf club.

Principal Issues:

Where a court order or agreement is made before May 1997 and child support amounts are otherwise deductible, the agreement will be considered to have a “commencement day” if the order or agreement is varied after April 1997 to increase or decrease the child support amounts payable (subparagraph 56.1(4)(b)(ii)). Is this subparagraph applicable if a pre-May 1997 agreement includes a term for a cost of living increase?

Position:

Subparagraph 56.1(4)(b)(ii) is not considered to be applicable.

Reasons:

Principal Issues:

Under a court judgment, a person is entitled to a share of her former spouse’s pension benefits. Is the person required to include the benefits received in her income?

Position: No

Reasons:

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

973302
XXXXXXXXXX G. Moore

February 10, 1998

Dear XXXXXXXXXX:

Re: Advance Income Tax Ruling Request
XXXXXXXXXX

This is in reply to your letter of December 10, 1997, in which you requested an advance income tax ruling regarding child support payments.

Principal Issues:

Whether accomodation, living and car allowances paid to employees employed at a special work site are tax-exempt.

Position:

Reasonable allowance for accomodation and living are exempt provided conditions of 6(6) are met, the car allowance is taxable.

Reasons:

Principal Issues:

Whether there is a gift when an individual transfers a property to a government agency (i.e., XXXXXXXXXX) who immediately turns the property over to an organization that is not a registered charity?

Position:

There is no gift in this situation.

Reasons:

Principal Issues: none

Position:

Reasons: