Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
912805
Dear 19(1):
We are writing in reply to your letter of October 2, 1991, wherein you requested our views as to whether or not a person would be entitled to claim a reserve under subparagraph 40(1)(a)(iii) of the Income Tax Act (the Act) in the following situation.
A taxpayer sells capital property to an arm's length purchaser on a deferred payment basis such that the taxpayer would be entitled to claim a reasonable reserve under the above noted subparagraph. However, before the due date for payment the taxpayer and the arm's length purchaser agree to extend the due date.
Our Comments
Whether or not the taxpayer would be entitled to a subparagraph 40(1)(a)(iii) reserve would involve a finding of fact that would require an examination of the original agreement of purchase and sale and any amending or collateral agreements related thereto. In view of the foregoing, we are unable to give a definitive response to your enquiry.
Should your enquiry relate to an actual taxpayer and a factual situation, you may wish to submit all relevant facts and documentation to the appropriate district taxation office for their views in this regard.
Yours truly,
P.D. FuocoSection ChiefPersonal and General SectionBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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