Income Tax Regulations — 9202
Application of related election 9202 (1) The following rules apply with respect to an election made under subsection (3) or (4) by a taxpayer: (a) the election applies only if (i) it is in writing, (ii) it specifies the first taxation year (in this subsection referred to as the “initial year”) of the taxpayer to which it is to apply, and (iii) either it is received by the Minister within six months after the end of the initial year, or the Minister has expressly accepted the later filing of the election; (b) subject to paragraph (c), the election applies to dispositions of specified debt obligations in the initial year and subsequent taxation years; and (c) if the Minister has approved, on written application by the taxpayer, the revocation of the election, the election does not apply to dispositions of specified debt obligations in the taxation year specified in the application and in subsequent taxation years. Prescribed specified debt obligation (2) For the purpose of subparagraph 142.4(5)(a)(ii) of the Act, a specified debt obligation disposed of by a taxpayer in a taxation year is prescribed in respect of the taxpayer if the amortization date for the obligation is not more than two years after the end of the taxation year. Prescribed specified debt obligation — exception (3) Subsection (2) does not apply in respect of a taxpayer for a taxation year if (a) generally accepted accounting principles require that the taxpayer’s gains and losses arising on the disposition of a class of debt obligations be amortized to profit for the purpose of the taxpayer’s financial statements; (b) the taxpayer has elected not to have subsection (2) apply; and (c) the election applies to dispositions in the year. Prescribed specified debt obligation (4) For the purpose of subparagraph 142.4(5)(a)(ii) of the Act, a specified debt obligation disposed of by a taxpayer in a taxation year is prescribed in respect of the taxpayer if (a) the taxpayer has elected to have this subsection apply; (b) the election applies to dispositions in the year; and (c) the absolute value of the positive or negative amount determined by the formula (A - B) does not exceed the lesser of $5,000 and the amount, if any, specified in the election, where A is the total of all amounts each of which is the residual portion of the taxpayer’s gain from the disposition of the obligation or any other specified debt obligation disposed of in the same transaction, and B is the total of all amounts each of which is the residual portion of the taxpayer’s loss from the disposition of the obligation or any other specified debt obligation disposed of in the same transaction. Prescribed specified debt obligation (5) For the purpose of subparagraph 142.4(5)(a)(ii) of the Act, a specified debt obligation disposed of by a taxpayer in a taxation year is prescribed in respect of the taxpayer if (a) the disposition resulted in an extinguishment of the obligation, other than an extinguishment that occurred because of a purchase of the obligation by the debtor in the open market; (b) the taxpayer had the right to require the obligation to be settled at any time; or (c) the debtor had the right to settle the obligation at any time. [NOTE: Application provisions are not included in the consolidated text; see relevant amending Acts and regulations.] SOR/2009-222, s. 7