Income Tax Act — I-3.3 98
en allowed to the person in respect of the property under regulations made under paragraph 20(1)(a) in computing income for taxation years before the acquisition by the person of the undivided interest or right; and (f) the partnership shall be deemed to have disposed of each such property for proceeds equal to the cost amount to the partnership of the property immediately before its distribution. (g) [Repealed, 2016, c. 12, s. 34] Where s. (3) does not apply (4) Subsection 98(3) is not applicable in any case in which subsection 98(5) or 85(3) is applicable. Where partnership business carried on as sole proprietorship (5) Where at any particular time after 1971 a Canadian partnership has ceased to exist and within 3 months after the particular time one, but not more than one, of the persons who were, immediately before the particular time, members of the partnership (which person is in this subsection referred to as the “proprietor”, whether an individual, a trust or a corporation) carries on alone the business that was the business of the partnership and continues to use, in the course of the business, any property that was, immediately before the particular time, partnership property and that was received by the proprietor as proceeds of disposition of the proprietor’s interest in the partnership, the following rules apply: (a) the proprietor’s proceeds of disposition of the proprietor’s interest in the partnership shall be deemed to be an amount equal to the greater of (i) the total of the adjusted cost base to the proprietor, immediately before the particular time, of the proprietor’s interest in the partnership, and the adjusted cost base to the proprietor of each other interest in the partnership deemed by paragraph 98(5)(g) to have been acquired by the proprietor at the particular time, and (ii) the total of (A) the cost amount to the partnership, immediately before the particular time, of each such property so received by the proprietor, and (B) the amount of any other proceeds of the disposition of the proprietor’s interest in the partnership received by the proprietor; (b) the cost to the proprietor of each such property shall be deemed to be an amount equal to the total of (i) the cost amount to the partnership of the property immediately before that time, and (i.1) [Repealed, 2016, c. 12, s. 34] (ii) where the amount determined under subparagraph 98(5)(a)(i) exceeds the amount determined under subparagraph 98(5)(a)(ii), the amount determined under paragraph 98(5)(c) in respect of the property; (c) the amount determined under this paragraph in respect of each such property so received by the proprietor that is a capital property (other than depreciable property) of the proprietor is such portion of the excess, if any, described in subparagraph 98(5)(b)(ii) as is designated by the proprietor in respect of the property, except that (i) in no case shall the amount so designated in respect of any such property exceed the amount, if any, by which the fair market value of the property immediately after the particular time exceeds the cost amount to the partnership of the property immediately before that time, (i.1) if such property is a membership interest in a partnership (in this subparagraph referred to as the “other partnership”), the fair market value of the property immediately after the particular time is deemed to be determined by the formula A − B where A is the amount that is the fair market value (determined without reference to this subparagraph) of the property immediately after its distribution to the proprietor, B is the portion of the amount by which the fair market value (determined without reference to this subparagraph) of the property immediately after its distribution to the proprietor exceeds the cost amount to the partnership of the property immediately before its distribution that may reasonably be regarded as being attributable to the total of all amounts each of which is immediately after the par