| August 25, 1989 | |
| K. Mannion | Head Office |
| Chief of Audit | Specialty Rulings |
| Winnipeg District Office | Dave Turner |
| (613) 957-2094 | |
| Attention: M. Monney | |
| File No. 7-3699 |
Subject: Partnership At-Risk Rule
24(1)
We are writing in reply to your memorandum of February 24, 1989, wherein you requested our opinion related to a guarantee made by the general partner of the 24(1)
In your letter you outlined the following:
24(1)
Your Representations
24(1)
Taxpayer's Representations
24(1)
Our Comments
It is our opinion, as supported by Legal Services, that the Agreement will govern the determination of a limited partner's share of the loss of the Partnership from a source for purposes of paragraph 96(1)(g) of the Income Tax Act (the "Act"). This will result in a limitation of 24(1) Prior to the introduction of subsection 96(2.2) of the Act, no relevant provision existed which would reduce a limited partner's adjusted cost base of his partnership interest in respect of a return of capital, an inducement or assistance which he was entitled to receive in the future.
The above facts can be distinguished from the 88 DTC 6427- Signum Communications Inc. case in that the partners did actually invest the full 24(1) were risking their entire investment and the possibility existed that the General Partner would not have been able to fulfil its obligations under the guarantee.
We trust our comments will be of assistance to you.
Acting ChiefMerchandising, Manufacturing and Construction SectionSmall Business and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch