4 September 1991 T.I. (Tax Window, No. 9, p. 20, ¶1445)

Where there is a partial repayment of a debt acquired by a taxpayer on capital account and at a discount, the taxpayer must use the part disposition method, i.e., part of the debt is considered to be disposed of each time a payment is received, resulting in a capital gain.

Where there is a partial repayment of a debt acquired on income account at a discount, the taxpayer may use either the part disposition method or the cost recovery method. Under the cost recovery method, no amount is taken into income until the cost of the debt has been recovered.