The taxpayer bought an 80% share of a partnership from his wife's business corporation for $1 million and then reported 80% of the partnership's $7.5 million loss. The minister disputed the loss under ss. 103(1) and (1.1).
Subsection s. 103(1.1) did not apply. The subsection non-exhaustively lists two indicia of reasonableness - capital invested and work performed. The members' respective investment and work supported the 80% allocation to the taxpayer. It was irrelevant that the taxpayer's purchase of the partnership interest was partially motivated by claiming the loss.