The taxpayer made a $1.15 million loan in 2002 to a corporation that was wholly owned by her spouse. The corporation had not conducted any business since 2004, and the Court confirmed that the loan became uncollectible in 2007. Given that the loan became uncollectible more than 12 months after the corporation ceased to carry on business, Woods J. found that the taxpayer was ineligible for an allowable business investment loss.
The taxpayer relied on authorities which provided that a company that is temporarily dormant may still be carrying on an active business. Woods J. stated that this argument would assist the taxpayer "only if the cessation of [the] business was considered to be temporary sometime after December 31, 2006" (para. 13).