| October 13, 1989 | |
| Mr. R.C. Shultis | Current Amendments and |
| Director | Regulations Division |
| Publications Division | R.D. Weil 957-2066 |
| Attention: Mr. G. Keable | SECRET |
| File No. F-3253 |
Interpretation Bulletin Project Number 1699 Retired Partners Revision of IT-242R
This is in reply to your memorandum of September 7, 1989 in which you requested that we review version 3 of the proposed revision to IT-242.
21(1)(b)
General Comment
It might be helpful to expand the comments in paragraph 10 to reflect the Federal Court decision in the case of Delesalle v. The Queen, The Queen, The Queen v. Cohos [1986] 1 CTC 58 wherein it was held that an agreement by the remaining partners to allocate income to a retiring partner under subsection 96(1.1) was not effective. There have been a string of cases on this point, the latest being the decision of the Tax Court of Canada in Sidney Valo, Lorne Barsky v. M.N.R. (1989 1 C.T.C 2339.
B.J. Bryson Acting DirectorCurrent Amendments and Regulations Division
c.c.: T. Ellis, Department of Finance
RDW/jab