Income Tax Act — I-3.3 142.4
he Minister before July 1997, to have this paragraph apply, the following rules apply: (d) subsection 142.4(4) does not apply to the disposition, (e) there shall be included in computing the taxpayer’s income for the year the amount, if any, by which the taxpayer’s proceeds of disposition exceed the tax basis of the obligation to the taxpayer immediately before the disposition, and (f) there shall be deducted in computing the taxpayer’s income for the year the amount, if any, by which the tax basis of the obligation to the taxpayer immediately before the disposition exceeds the taxpayer’s proceeds of disposition. Gain or loss from disposition of obligation (6) For the purposes of this section, (a) where the amount determined under paragraph 142.4(6)(c) in respect of the disposition of a specified debt obligation by a taxpayer is positive, that amount is the taxpayer’s gain from the disposition of the obligation; (b) where the amount determined under paragraph 142.4(6)(c) in respect of the disposition of a specified debt obligation by a taxpayer is negative, the absolute value of that amount is the taxpayer’s loss from the disposition of the obligation; and (c) the amount determined under this paragraph in respect of the disposition of a specified debt obligation by a taxpayer is the positive or negative amount determined by the formula A - (B + C) where A is the taxpayer’s proceeds of disposition, B is the tax basis of the obligation to the taxpayer immediately before the time of disposition, and C is the taxpayer’s transition amount in respect of the disposition. Current amount (7) For the purposes of subsections 142.4(4) and 142.4(8), the current amount of a taxpayer’s gain or loss from the disposition of a specified debt obligation is (a) where the taxpayer has a gain from the disposition of the obligation, the part, if any, of the gain that is reasonably attributable to a material increase in the probability, or perceived probability, that the debtor will make all payments as required by the obligation; and (b) where the taxpayer has a loss from the disposition of the obligation, the amount that the taxpayer claims not exceeding the part, if any, of the loss that is reasonably attributable to a default by the debtor or a material decrease in the probability, or perceived probability, that the debtor will make all payments as required by the obligation. Residual portion of gain or loss (8) For the purpose of subsection 142.4(4), the residual portion of a taxpayer’s gain or loss from the disposition of a specified debt obligation is the amount, if any, by which the gain or loss exceeds the current amount of the gain or loss. Disposition of part of obligation (9) Where a taxpayer disposes of part of a specified debt obligation, section 142.3 and this section apply as if the part disposed of and the part retained were separate specified debt obligations. Penalties and bonuses (10) Notwithstanding subsection 18(9.1), where a taxpayer that holds a specified debt obligation receives a penalty or bonus because of the repayment before maturity of all or part of the principal amount of the debt obligation, the payment is deemed to be received by the taxpayer as proceeds of disposition of the specified debt obligation. Payments received on or after disposition (11) For the purposes of this section, where at any time a taxpayer receives a payment (other than proceeds of disposition) under a specified debt obligation on or after the disposition of the obligation, the payment is deemed not to have been so received at that time but to have been so received immediately before the disposition. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] 1995, c. 21, s. 58; 1998, c. 19, s. 165