In one of the alternative scenarios for the sale of the client list of a retiring professional, the sale price is 25% of the fees earned over the next four years from the transferred clients, but with a $400,000 maximum amount (and no minimum).
CCRA indicated that s. 12(1)(g) would not apply if the $400,000 maximum amount equals the fair market value of the property at the time of the sale, even though this maximum may subsequently be reduced in the event that the total fees collected over the four years do not reach this maximum. In this situation, s. 14 would apply, so that the $400,000 sale price would be included in para. (a) of E of the CEC in the taxation year of the sale of the client list, given that there is a possibility that the vendor may be able to claim this amount. If (in the 4th year) a definitive reduction in the sale price becomes established, the CEC will become positive and, if the taxpayer no longer owns eligible capital property and has ceased carrying on the business, s. 24(1)(a) would allow the taxpayer to deduct the CEC.