2 October 1995 External T.I. 9518885 - TERMINATION OF PARTNERSHIP

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether paragraph 13(7)(e) and subsection 14(3) apply to property acquired by a partner in a situation to which paragraph 98(5) applies in light of paragraph 98(5)(g), which provides that where the partner/sole proprietor acquires the partnership interests of the other members in the partnership, the partner/sole proprietor is deemed to have acquired partnership interests rather than the property of the partnership.

Position TAKEN:

No answer provided.

Reasons FOR POSITION TAKEN:

Transaction completed and under review by the Tax Services Office.

Nevertheless, in our view, paragraph 13(7)(e) and subsection 14(3) would apply, since paragraph 98(5)(g) simply clarifies that, for purposes of paragraph 98(5)(a), where the other partners' interests are acquired, the cost of acquiring such interests is deemed an acquisition of partnership interests and not an acquisition of partnership property.

Cross-reference: see Document #E9325685.

		5-951888
XXXXXXXXXX		C. Chouinard

Attention: XXXXXXXXXX

October 2, 1995

Dear Sir:

Re: Canadian Partnership and Subsection 14(3) and Paragraph 13(7)(e)

We are writing in response to your letter of July 12, 1995, wherein you asked us to clarify the comments we made in a letter dated June 24, 1994, regarding the interaction of paragraph 98(5)(d) of the Income Tax Act (the "Act") and the above-mentioned provisions of the Act.

Unfortunately, we cannot respond to your letter, as it has recently come to our attention that the situation in respect of which you wrote to us is a completed transaction and is presently under review by the Vancouver Tax Services Office.

You should note, however, that we cannot agree with your interpretation of paragraph 98(5)(g) of the Act and we continue to maintain the views reflected in our June 24, 1994 letter.

Yours truly,

R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch