The taxpayer made a $12,000 deduction under s. 20(1)(l) for a doubtful debt in 2002 but did not report the amount deducted as income in the following taxation year. The trial judge treated the s. 20(1)(l) deduction as if it had been a s. 20(1)(p) deduction for a bad debt, and dismissed the taxpayer's appeal when the taxpayer was unable to show that there was a debt that had become unrecoverable in 2002. The Court of Appeal affirmed the decision at trial. Trudel J.A. stated (at para. 9):
I agree that if the reserve which the appellant purports to have claimed for doubtful debts for his 2002 taxation year was treated as such and included in his income for the subsequent taxation year, as was required by paragraph 12(1)(d), he was entitled to a $12,000 deduction in 2002 regardless of the label placed on the deduction which he claimed.