In February 2008, a limited partnership (“LP”) realized a capital gain, of which $100,000 was allocable to Limited Partner A, whose interest had an adjusted cost base at the beginning of the (calendar) 2008 fiscal period of LP. $100,000 was withdrawn by Limited Partner A in March 2008. In finding that Limited Partner A realized a negative ACB gain, CRA stated:
[T]he ACB of Limited Partner A's interest as at December 31, 2008 is negative in the amount of $90,000 after taking into account the withdrawal of $100,000 made in March 2008. As a result, Limited Partner A would have a deemed capital gain of $90,000, which is equal to Limited Partner A's negative ACB at the end of the partnership's fiscal period. In this case, the ACB of the interest is adjusted to nil as of December 31, 2008. In addition, in computing the ACB of the Limited Partner's interest in the LP on January 1, 2009, it is necessary to take into account the income of the LP for its fiscal period ended December 31, 2008 that was distributed to Limited Partner A. Based on the foregoing and assuming that there are no other items adjusting the ACB of Limited Partner A's interest, Limited Partner A's ACB as of January 1, 2009 would be $100,000.