NRT Technology - Tax Court dusts off the REOP tests for application in a loss streaming case

The reasonable expectation of profit doctrine has been largely defunct since Stewart and Walls in the context in which it was originally most often applied by CRA (businesses financed as tax shelters and non-hobby farming losses).  However, the criteria developed in the pre-Stewart cases for determining the existence of "REOP" (e.g., Tonn) were applied by Campbell Miller J to find that a loss business of a purchased corporation (which presumably was wound-up into the taxpayer, although he doesn't say) was not carried on with a REOP, as explicitly required in the statutory words of s. 111(5)(a) (and, in fact, the business was essentially dormant following the acquisition).  Accordingly, the losses could not be utilized.

Neal Armstrong.  Summary of NRT Technology Group v. The Queen, 2012 TCC 420 under s. 111(5)(a).