CRA position implies that dissolving a partnership can have the effect of postponing indefinitely the recognition of a suspended capital loss

The postamble to s. 40(3.4) provides that, for purposes of the suspended loss release events listed in s. 40(3.4)(b), a dissolved partnership is deemed to continue to exist and its partners to continue to be partners until immediately before the occurrence of such a release event.  CRA considers that this means that if a capital loss, which was suspended on the disposition of a partnership interest to an affiliated corporation, will continue to be suspended after the dissolution in a subsequent year of the partnership and thereafter until the transferor and transferee cease to be affiliated, or there is an acquisition of control of the transferor – or perhaps some more obscure release event occurs.

Although, at first glance, this looks reasonable, it seems to imply that the loss will remain suspended even if the former partnership business is sold to a third party.

Neal Armstrong.  Summary of 27 October 2014 Memo 2014-0534981I7 F under s. 40(3.4).