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.
Q.13 Negative ACB of Partnership Interest
If a person wishes to transfer a partnership interest having a "negative adjusted cost base" to a corporation using a subsection 85(1) election, does Revenue Canada take the position that the minimum transfer value is $1.00, thereby triggering a capital gain to the transferor equal to the "negative adjusted base"?
Department's Position
The Department does not take the position that the minimum transfer value in the situation described is $1.00. Paragraph 85(1)(c.1) provides that the elected amount on a subsection 85(1) rollover in respect of a partnership interest having a "negative adjusted cost base" cannot be less than the lesser of its fair market value and its cost amount. By virtue of subparagraph 54(a)(iv) and the definitions of "amount" and "cost amount" under subsection 248(1), the elected amount cannot be less than nil. Accordingly, the minimum transfer value in the situation described is nil. Pursuant to subsection 100(2), the rollover of the partnership interest will trigger a capital gain to the transferor equal to the "negative adjusted cost base".
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