14 January 2010 Internal T.I. 2009-0323991I7 F - Débenture échangeable et opération à terme -- summary under Subparagraph 152(4)(a)(i)

After finding that a cash premium paid by the taxpayer in settling an exchangeable debenture issued by a predecessor was only half-deductible under s. 20(1)(f)(ii) rather than fully deductible under s. 20(1)(f)(i), and that a payment made to cash settle a forward sale contract was not deductible under s. 20(1)(f) at all, the Directorate went on to find that the CRA could reassess the taxpayer beyond the normal reassessment period respecting the taxpayer’s deduction of these payments in full, noting that at the time of the reporting, the CRA position respecting such amounts was reflected in severed letters and that if a “wise and prudent person” had reviewed the returns, the material amounts claimed in this regard would have caught its attention and prompted an inquiry with its accountant.