25 March 1997 External T.I. 9706495 - SURRENDERING INTEREST IN INHERITANCE

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:

Does a note surrendered by a beneficiary of the estate which later distributes the note to the debtor considered to be a bequest or inheritance and thus escapes the application of section 80?

Position:

Application of provincial laws. Very dependent on particular facts. Would only escape section 80 if original beneficiary had an interest in the note or surrender in the note considered to be an occurance as a consequence of death and a bequest or inheritance to the eventual debtor recipient.

Reasons:

Subsection 80(2) exception for bequest or inheritance

970649
XXXXXXXXXX C. Tremblay

Attention: XXXXXXXXXX

March 25, 1997

Dear Sirs:

Re: Surrendering Interest in Inheritance

This is in reply to your letter of March 4, 1997, wherein you seek our opinion on the application or exception to the debt forgiveness rules in the situation described.

The situation that is described appears to involve a series of actual completed transactions involving specific taxpayers. Furthermore, the conclusions are so heavily dependent on provincial estate laws and on the particular facts of the matter that we are unable to provide any opinion in respect of the specific transactions described in your letter. Any opinion that we may offer might very well change upon a review of all of the facts and particularly after an examination of all pertinent documentation. We suggest that your questions be directed to your District Taxation Services Office which has the responsibility of determining the tax consequences of completed transactions and their implications to the specific taxpayers.

We trust our comments will be of assistance to you.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch