17 January 1991 Internal T.I. 7-90326

The interest component of damages received by a limited partnership in respect of interest assessments of its partners as a result of the failure of a principal business corporation to fully renounce amounts under a flow through share agreement to the partnership constituted amounts described in s. 12(1)(x)(iv), given the expansion of that provision to include "outlays" in addition to "expenses" (meaning deductible expenses). However, s. 12(2.2) would provide relief.

Damages paid by a principal business corporation to an investor limited partnership including amounts in respect of interest assessed against the partners as a consequence of a failure to renounce agreed amounts were eligible capital expenditures to the principal business corporation.