(1) First scenario: (a) whether the tax paid in respect of a capital gain arising from the disposition of a U.S. real property to the extent it relates to portion of the gain accruing prior to immigration forms part of "non-business-income tax" under paragraph 126(1); and
(b) whether the foreign tax credit that is calculated under subsection 126(1) in respect of the aforesaid U.S. tax can be applied against Canadian tax otherwise payable on all U.S. source non-business income.
(2) Second scenario: (a) whether the tax paid by an individual Canadian resident who is a shareholder of a U.S. S-corporation to the U.S. government in respect of the income of the U.S. S-corporation, is deductible by the individual under subsection 91(4) of the Act;
(b) if paragraph 5 of Article XXIX of the Canada-U.S. Income Tax Convention (1980) (the “Treaty”) is applicable, whether income of the U.S. S-corporation that is deemed to be FAPI of the individual, is foreign source income for the purpose of computing the individual's foreign tax credit under subsection 126(1); and
(c) whether the aforesaid U.S. tax paid by the individual in respect of the income of the U.S. S-corporation forms part of "non-business-income tax" for the purpose of computing the individual’s foreign tax credit under paragraph 126(1).
(1) . First scenario: Yes to both questions (a) and (b).
(2) . Second scenario: No to question (a), and yes to questions (b) and (c).