Mr. X made an election under s. 110.6(19) in respect of his trading business carried on, on February 22, 1994, and, as a consequence, had an "exempt gains balance" as defined in s. 14(5). In 2005, he transferred his business to a wholly-owned corporation under s. 85. CRA indicated that although he could elect to recognize an amount equal to his exempt gains balance by choosing an appropriate agreed amount, “such an agreed amount would result in an amount being required to be included in Mr. X's income for 2005 under paragraph 14(1)(a) because Mr. X has already claimed deductions in respect of the Goodwill pursuant to paragraph 20(1)(b).” Furthermore:
[T]he benefit of the paragraph 110.6(19)(b) election in respect of goodwill, i.e. the "exempt gains balance", would be lost if the agreed amount elected in respect of goodwill was equal to 4/3 of the CEC balance ... .