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.
DATE: June 16, 1983
TO- CALGARY DISTRICT OFFICE
FROM-DE HEAD OFFICE Corporate Rulings Directorate G.R. White Tel: 593-6201
ATTENTION D.E. Kautzman
Audit Review
RE: ACB of Partnership Interest -------------------------------
This is in reply to your memo of April 27, 1983 describing the lack of symmetry in the tax treatment of deductions for depletion made by a partner and the recovery by the partnership of amounts which were in- cluded in the earned depletion base of the partner.
Expenditures incurred by a partnership which qualify for depletion are included in the earned depletion base of the partner. The deductions for depletion provided by subsection 65(1) is claimed by the partner pursuant to subsections 1206(3) and section 1201 of the Regulations. There is no provision in subsection 53(2) requiring the partner to reduce the ACB of his partnership interest by the amount computed under section 1201 of the Regulations.
Amounts receivable by the partnership which reimburse the partnership for costs which were included in the partner's earned depletion base are included in the income of the partnership by virtue of subsections 59(3.3) and 96(1) of the Act. As a result the ACB of the partner's interest is increased by virtue of subparagraph 53(1)(e)(i) of the Act.
It is your opinion that the amount determined under subsection 59(3.3) should be included in computing the income of the partner, rather than the partnership. Alternatively, it is arguable that the amounts deducted by the partner pursuant to subsection 65(1) should reduce the ACB of the partner's interest in the same way that other amounts deductible at the partner level, namely the expenses described in subparagraph 53(2)(c)(ii), reduce the ACB of the partnership interest.
We are referring this issue to our Current Amendments Division and we thank you for bringing it to our attention.
Chief Mines, Oil & Forest Industries Section Specialty Corporations Rulings Division Corporate Rulings Directorate Legislation Branch
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