Income Tax Regulations — 5908
p disposes of any of those shares, (a) any reference in this Part (other than subsections 5902(5) and (6)) to subsection 93(1) of the Act is deemed to include a reference to subsection 93(1.2) of the Act; (b) an election under subsection 93(1.2) of the Act by the particular corporation is to be made by filing the prescribed form with the Minister on or before (i) where the particular corporation is the disposing corporation referred to in that subsection, the particular corporation’s filing-due date for its taxation year that includes the last day of the particular partnership’s fiscal period in which the disposition was made, and (ii) where the particular affiliate is the disposing corporation referred to in that subsection, the particular corporation’s filing-due date for its taxation year that includes the last day of the particular affiliate’s taxation year that includes the last day of the disposing partnership’s fiscal period in which the disposition was made; and (c) the prescribed amount for the purposes of subparagraph 93(1.2)(a)(ii) of the Act is the lesser of (i) the taxable capital gain, if any, of the particular affiliate otherwise determined in respect of the disposition, and (ii) the amount determined by the formula A × B × C/D where A is the fraction referred to in paragraph 38(a) of the Act that applies to the particular affiliate’s taxation year that includes the last day of the particular partnership’s fiscal period that includes the time of the disposition, B is the amount that could reasonably be expected to have been received in respect of all the shares of that class if the second foreign affiliate referred to in subsection 93(1.2) of the Act had, immediately before that time, paid dividends, on all shares of its capital stock, the total of which was equal to the amount determined under subparagraph 5902(1)(a)(i) to be its net surplus in respect of the particular corporation, C is the number of shares of that class that is determined under subsection 93(1.3) of the Act, and D is the total number of issued shares of that class immediately before that time. (9) For the purposes of this Part, except to the extent that the context otherwise requires, if a person or partnership is (or is deemed by this subsection to be) a member of a particular partnership that is a member of another partnership, the person or partnership is deemed to be a member of the other partnership. (10) For the purposes of paragraph 95(2)(j) of the Act, the adjusted cost base to a foreign affiliate of a taxpayer of an interest in a partnership at any time is prescribed to be the cost to the affiliate of the interest as otherwise determined at that time, and for those purposes (a) there shall be added to that cost such of the following amounts as are applicable: (i) any amount included in the affiliate’s earnings for a taxation year ending after 1971 and before that time that may reasonably be considered to relate to profits of the partnership, (ii) the affiliate’s incomes as described by the description of A in the definition foreign accrual property income in subsection 95(1) of the Act for a taxation year ending after 1971 and before that time that can reasonably be considered to relate to profits of the partnership, (iii) any amount included in computing the exempt earnings or taxable earnings, as the case may be, of the affiliate for a taxation year ending after 1971 and before that time that may reasonably be considered to relate to a capital gain of the partnership, (iii.1) any amount included in computing the hybrid surplus or hybrid deficit of the affiliate before that time that may reasonably be considered to relate to a capital gain of the partnership, (iv) where the affiliate has, at any time before that time and in a taxation year ending after 1971, made a contribution of capital to the partnership otherwise than by way of a loan, such part of the amount of the contribution as cannot reasonably be regarded as a gift made to