An individual who acquired flow-through shares of a principal-business corporation (PBC) on February 1, 2013, entered into a flow-through share agreement in writing, and died on December 30, 213. What deductions and credits would be available in the deceased’s terminal return or to the estate if the PBC renounced pursuant to s. 66(12.66) all of its Canadian exploration expenses (CEE) on February 15, 2014? CRA first noted that:
[A] renunciation of CEE or CDE by a PBC to a particular person cannot take effect after the death of that person because the particular person ceases to exist at the time of death. In addition, and subject to subsection 66(12.66), a PBC cannot renounce any expenses that it has incurred on or before the date the renunciation takes effect.
Turning to s. 66(12.66), CRA stated:
[O]ne of the conditions for this subsection to apply in order to permit expenses incurred in 2014 to be taken into account is that the renunciation takes effect on December 31, 2013. Consequently, a person who dies before December 31, 2013 cannot benefit from the expenses referred to in subsection 66(12.66) and incurred by a PBC in 2014.