Subsection 43(1) - General rule for part dispositions
Administrative Policy
1 October 2013 T.I. 2013-0491571E5 - Partial disposition of partnership interest - ACB
Where a partner disposes of some of its units of a partnership during the year, is there an ACB adjustment for the entire amount of the income allocated to that partner for the fiscal period? After noting that "all of the units that a partner holds in a partnership constitute a single property, i.e. the partner's interest in the partnership" so that, for example, a disposition of "40% of its partnership units…constitutes a partial disposition of its partnership interest," CRA stated:
Where the partial disposition occurs during the fiscal period of the partnership and thus the ACB adjustment for that fiscal period is not reflected in the ACB of the partnership interest for purposes of computing the gain or loss on the partial disposition, it is our view that the ACB of the remaining partnership interest will be increased by that ACB adjustment.
18 June 2012 T.I. 2012-0446131E5
"the phrase 'at that time' as used in subsection 43(1) of the Act, would, in our view, refer to the time immediately before the particular triggering event that resulted in the application of the subsection which was the partial disposition of the property."
Rulings Directorate Discussion and Position Paper on Motion Picture Films and Video Tapes as Tax Shelters, Version 29/3/93 930501 (C.T.O. "Motion Picture Films - C.C.A.")
In an arrangement in which a creditor is entitled to all the income and losses following conversion of its loan into an interest in a film partnership, it is arguable that the continuing limited partner has partly disposed of his partnership interest because his entitlement to share in profits and losses has been reduced to nil. Although the issue is considered to be arguable, RC will consider the proceeds of disposition of the interest to be equal to the amount of the liability converted.
4 September 1991 T.I. (Tax Window, No. 9, p. 20, ¶1445)
Where there is a partial repayment of a debt acquired by a taxpayer on capital account and at a discount, the taxpayer must use the part disposition method, i.e., part of the debt is considered to be disposed of each time a payment is received, resulting in a capital gain.
IT-373R "Farm Woodlots and Tree Farms"
Amounts received for permitting other persons to remove standing trees from a woodlot will normally reduce the adjusted cost base of the whole property to the extent of the amount received, rather than giving rise to immediate tax consequences.
IT-264R "Part Dispositions"
Although the making of a mortgage instalment payment is considered to be a partial redemption of the mortgage (i.e., a part disposition), the taxpayer may treat any gain as only being realized after full recovery of the mortgage acquisition cost if the mortgage discount is "minor."