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.
QUESTION #41 - PARTNERSHIP - NEGATIVE ADJUSTED COST BASE
Where subsection 98(6) applies to a continuation of a Canadian partnership by a new partnership and the interest of a partner in the predecessor partnership has a negative adjusted cost base at the end of a fiscal period of the partnership, do the deeming provisions of subsection 98(1)(c), which would otherwise deem the negative adjusted cost base of the partner's interest in the partnership to be a gain of the partner from a disposition of the interest?
DEPARTMENT'S POSITION
Where subsection 98(6) applies, each member of the new partnership will be deemed not to have disposed of his partnership interest in the predecessor partnership. Therefore, subsection 98(1) does not have application. The result is that any "negative adjusted cost base" of a partnership interest of such a member will continue as an element of the adjusted cost base of his new partnership interest. Any "negative adjusted cost base" of a partner who does not continue into the new partnership will be required to be recognized because the preamble of subsection 98(6) would not be satisfied.
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