cost

18 May 2017 Roundtable, 2017-0692361C6 - CLHIA 2017 Q4 - Gift of a life insurance policy -- summary under Subsection 248(36)

Mr. A acquired a life insurance policy on his life with a $1 million death benefit and then transferred it to his wholly-owned corporation (ACo) for no proceeds at a time that it had a nil adjusted cost basis (ACB) and cash surrender value (CSV). Thereafter, while the policy has a fair market value (FMV), ACB and CSV of $100,000, $50,000 and nil, respectively, ACo will donate this policy to a registered charity.

14 March 2016 Internal T.I. 2015-0609671I7 - Earnout, Amalgamation, Cost of Shares and ECE -- summary under Adjusted Cost Base

A Canadian Acquisitionco acquired Canadian Targetco for a cash base price plus earnout obligations, and then immediately merged with Targetco under a short-form amalgamation. The Rulings Directorate rejected Amalco’s treatment of its earnout payments as eligible capital expenditures, stating:

[R]egardless of whether the [Targetco] Shares existed at the time that the Earnout Payments became payable or paid, the Earnout Payments nevertheless are part of the cost of the Shares. Mandel…appears to dictate such a result….

By services, 28 November, 2015

Bodrug Estate v. The Queen, 90 DTC 6521, [1990] 2 CTC 324 (FCTD), aff'd 91 DTC 5621 (FCA) -- summary under Adjusted Cost Base

An estate paid $1,320,000 to settle an action brought against it by two other persons ("Cohen" and "NIR") for specific performance of an option which the deceased had given to sell shares of a company ("Hidrogas"). This settlement enabled the estate to tender its shares of Hidrogas to a takeover bid at a substantially higher price than the market price at the time of the settlement agreement.

By services, 28 November, 2015

The Queen v. Stirling, 85 DTC 5199, [1985] 1 CTC 275 (FCA) -- summary under Adjusted Cost Base

The word "cost" in s. 54(a) "means the price that the taxpayer gave up in order to get the asset; it does not include any expense that he may have incurred in order to put himself in a position to pay that price or to keep the property afterwards." Interest on the unpaid portion of the price of gold bullion, and safe keeping charges incurred during the period following the taxpayer's acquisition of the bullion, accordingly could not be added to the adjusted cost base of the gold bullion.

By services, 28 November, 2015

Water's Edge Village Estates (Phase II) Ltd. v. Canada, 2002 DTC 7172, 2002 FCA 291 -- summary under A

In December 1991 the taxpayers (who were Canadian residents) acquired most of the partnership interests in a U.S. partnership ("Klink") that had been formed approximately 12 years earlier and whose principal asset, in December 1991, was an IBM mainframe computer which originally had cost U.S.$3.7 million but which had a current fair market value of $5,000. Klink then transferred the computer to a recently-formed British Columbia limited partnership in consideration for a partnership interest therein.

By services, 28 November, 2015

Consumers' Gas Company Ltd. v. The Queen, 82 DTC 6300, [1982] CTC 339 (FCTD), aff'd, 84 DTC 6058, [1984] CTC 83 (FCA) -- summary under A

Amounts expended by the taxpayer to install new pipelines were additions to the capital cost of its depreciable assets notwithstanding that it was reimbursed in whole or in part by government or private sources. Walsh J quoted (at 6304, with approval) the statement of Lord Atkin in Corp. of Birmingham v. Barnes (1935), 19 T.C. 195, at 217 (HL):

cost