5-910317
Dear sirs:
Re: Section 79 of the Income Tax Act (the "Act")
This is in response to your letter of January 29, 1991 in which you requested our views on the application of section 79 of the Act to a taxpayer on the acquisition or reacquisition of real property as a result of the execution of a "quit claim and release" by the mortgagor in favour of the mortgagee taxpayer of the mortgagee taxpayer.
You described a "quit claim and release" as a document which "states that the mortgagor transfers his interest in the property to the mortgagee satisfaction of all claims that the mortgagee has against the mortgagor in respect of the mortgage loan ".
It is our view that a mortgagee who acquires or reacquires property as a result of an execution of such a quit claim and release by a defaulting mortgagor meets the requirements of that portion of section 79 that precedes paragraph (c).
This position is consistent with the views of the department set out in paragraph 2 of Interpretation Bulletin IT-505, issued in December of 1986.
The foregoing comments are given in accordance with the practice referred to in paragraph 21 of Information Circular 70-6R2 dated September 28, 1990 and are not binding on Revenue Canada, Taxation.
Yours truly,
for DirectorReorganizations and Non-resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch