| August 11, 1989 | |
| E. Noël de Tilly | Technical Interpretations |
| Director | Division |
| Appeals and Referral Division | R.E. Thompson |
| Technical Interpretations | 957-9227 |
Re: ADVERSE DECISION-ESTATE OF THE LATE HENRY E. REED
In his decision of July 27, Judge Mogan decided that a principle residence was a capital property under paragraph 54(b) notwithstanding paragraph 40(2)(b). This appears to us to be the correct result. It appears to be quite consistent with the application of the optional method given to farmers under subparagraph 40(2)(c)(ii) for computing the principal residence exemption.
The reason why the dispute went to Court is not spelled out in the Reasons for Judgment, but we would surmise that the taxpayer wanted the section 80 "grind" to apply to the deceased's principal residence rather than the depreciable property or the "agricultural land". 21(1)(b)
21(1)(a)
A.G. Cockell Director Technical Interpretation DivisionLegislative and Intergovernmental Affairs Branch