1 February 2024 External T.I. 2023-0994141E5 - Cost Recovery Method in IT-426R (Archived) -- summary under Paragraph 12(1)(g)

After referring to its conclusion in 2021-0884651E5 that the cost recovery method (as described in IT-426R) cannot be applied, where a Canadian resident taxpayer is a member of a partnership that sells shares of a corporation, CRA stated:

Following your representations, the CRA is prepared to re-examine whether the cost recovery method should apply to Canadian resident taxpayers that are members of partnerships that sell shares subject to an earnout agreement. …

In its review, the Income Tax Rulings Directorate will have to consult internal stakeholders and the whole process may take some time. Therefore, any change of position would likely be disclosed at a future CRA Round Table, rather than in the context of a technical interpretation.

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