28 March 1991 Income Tax Severed Letter

By services, 22 July, 2022
Language
English
Document number
Severed letter type
Miscellaneous
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
657765
Extra import data
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"menu:://Federal Income Tax [CCH Tax ]/Tax Window Files/Tax Window Files/Tax Window Files/1990s/1991 [MA91_339 - 903198]/MR91_429 — Right of Way and Easement Costs"
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"field_proprietary_citation": [],
"field_release_date_new": "1991-03-28 07:00:00",
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}
Main text

March 28, 1991

Audit Programs Directorate              Rulings Directorate
Special Audits Division                 Resource Industries
E.H. Gauthier                             Section
Director                                Peter Lee
                                        957-9769
Attention:  B.A. Chisholm
            Specialized Industries Section
                                        7-910157

Industry Issue Report #06 Right of Way & Easement Costs

We are writing in reply to your memorandum of January 16, 1991, in which you requested our confirmation that the positions relied upon by you which are reflected in report #06 are the current policies of Rulings in regards to the issue of deductibility for tax purposes of amounts incurred by a taxpayer to acquire an easement or right of way on property owned by another party. A copy of report #06 is attached to this memorandum for your quick reference.

We confirm that our general positions with respect to right of way and easement costs as stated in our memoranda dated July 6, 1989 (7-4076), July 4, 1986 (7-0395) and December 7, 1981, continue to be our current positions on the matter. However, we have the following suggestions for your consideration to modify the report:

1. In the second paragraph under the heading of "Tax Implications", the second sentence should be amended to replace "that may be written off" with "that may be added to its cumulative eligible capital".

2. The third paragraph under the same heading as above should be expanded to include the difference between the annual claims under paragraphs 20(1)(a) and (b) (i.e. 4% vs. 5 1/4% of cost to the taxpayer, respectively).

3. In the fourth paragraph under the heading of "Background", the tax treatment of the surface rights rentals should be modified to reflect our comments in the memo to file with respect to surface rights rentals, a copy of which is attached to this memorandum.

We hope that our comments are helpful to you.

Director Bilingual services & Resource Industries Division Rulings Directorate

000429