28 September 2006 Internal T.I. 2006-0202901I7 F - Subsection 80(4) - Impact on the CDA -- summary under Subparagraph (a)(ii)

In finding that the application of a net capital loss under s. 80(4) does not reduce the deduction for the non-taxable portion of realized capital losses under para. (a)(ii) of the CDA definition, the Directorate indicated that s. 80(4)(b) reduces the net capital losses of a corporation where a commercial obligation issued by a debtor is settled and a forgiven amount results from such settlement of debt, and has no effect on the amount of capital losses and allowable capital losses sustained by a taxpayer, whereas s. (a)(ii) of the CDA definition sustained by the taxpayer in the relevant period (irrespective of how they have been applied).