QUESTION I-99
DEPRECIABLE PROPERTY - ALLOCATION OF PROCEEDS ON DEATH
Assume a taxpayer dies owning several assets of the same class of depreciable property. What provision does Revenue Canada rely upon to allocate deemed proceeds to each asset for determining capital gain, if any? Paragraph 70(5)(b) only deems proceeds for the class as a whole.
ANSWER
Paragraph 70(5)(d) provides that a beneficiary's deemed cost is determined by applying the ratio of the fair market value received over the total fair market value of the class of the property to the deemed proceeds calculated under paragraph 70(5)(b). It is the Department's view that this same ratio should be used to allocate deemed proceeds on an asset by asset basis in order to calculate the capital gain arising on death.
C.T.F. November 1990 L. Holloway Section 23