Subsection 24(1) - Ceasing to carry on business
Administrative Policy
17 December 2013 T.I. 2013-0510371E5 F - MCIA / CEC
A taxpayer acquired franchise rights which subsequently became worthless as a result of the bankruptcy of the franchisor. However, it continued to carry on the same business. In noting that there was no disposition permitting the recognition of a loss, CRA stated (TaxInterpretations translation):
The mere reduction (partial or complete) of the value of an eligible capital property does not by itself produce tax consequences.
25 August 1994 Memorandum 7-941102
Where a taxpayer ceased carrying on a distributing business upon the collapse of the underlying franchisor, it will be a question of fact whether the distribution rights are of no value and whether the taxpayer has any recourse against the franchisor.
IT-471R "Merger of Partnerships" under "Goodwill and Eligible Capital Expenditure"
Subsection 24(2) - Business carried on by spouse or common-law partner or controlled corporation
Administrative Policy
21 October 1991 T.I. (Tax Window, No. 12, p. 19, ¶1546)
Neither s. 24(2) nor s. 70(5.1) is elective, and there is no provision permitting the deemed receipt of fair market value proceeds.