Subsection 98(1) - Disposition of partnership property
Cases
Bow River Pipelines Ltd. v. The Queen, 2000 DTC 6090, Docket: A-359-98 (FCA)
A wholly-owned subsidiary of the taxpayer was wound-up into the taxpayer, as a result of which the taxpayer became the assignee of the subsidiary's 99.99% limited partnership interest in a resource partnership together with the shares of the general partner holding a 0.01% general partnership interest. On the following day, the general partner corporation was dissolved and all the Canadian resource properties of the former partnership were conveyed to the taxpayer.
The Trial Judge apparently had found that because the taxpayer had not become a substitute limited partner in the partnership but instead had the status only of an assignee of a limited partnership interest, the partnership dissolved at the time of the assignment of limited partnership interest to the taxpayer. Rothstein J.A. found that, under s. 98(1)(a), the partnership was deemed not to have ceased to exist until a transfer of legal title to the property of the partnership to the taxpayer, rather than at the time the taxpayer had an equitable right to the receipt of such property. Accordingly, the partnership did not cease to exist until the time of distribution.
See Also
OSFC Holdings Ltd. v. The Queen, 99 DTC 1044, [1999] FTR 33266, aff'd 2001 DTC 5471, 2001 FCA 260
A trust company ("Standard") formed a partnership between itself and a wholly-owned subsidiary, transferred a mortgage portfolio to the partnership and then sold its partnership interest to an arm's-length purchaser. In finding that substantial changes made to the partnership agreement at the insistence of the purchaser did not result in the dissolution of the partnership and its replacement by a fresh partnership, Bowie TCJ. stated (at para. 32) that a partnership's:
"essence is the business itself. Here it is clear that the same business was to be carried on after the sale to the Appellant as had been carried on before. I find that the partnership survived the amendment of the agreement and the sale of Standard's interest."
Howatt v. MNR, 89 DTC 215 (TCC)
The taxpayer ceased to be in partnership with his two brothers in December 1978, when a dispute arose and he was asked to leave, notwithstanding that he remained in possession of the partnership farm until March 1978, when he received a capital sum in full settlement of his partnership interest. He did not receive any income from the partnership in 1979. Brulé, J. held that the taxpayer was not required to include any share of the income of the partnership for the 3-month period ended on March 31, 1978, the date on which the partnership was alleged by the Minister to have terminated.
A. Akman & Sons (Fla) Inc. v. Chipman (1987), 38 BLR 185 (Man QB)
A real estate development partnership was terminated by the statement of the plaintiff that it wished to terminate the partnership and that it would not be paying its share of a balloon payment coming due on a mortgage secured on the partnership property, notwithstanding that a termination agreement was not concluded until later. (Partnership Act (S.M. 1965), s. 35(1)(c)).
Darke v. MNR, 76 DTC 6468, [1976] CTC 734 (FCTD)
An agreement whereby one of the three partners of a partnership sold his undivided 1/3 interest in the partnership assets to the other two partners was held to entail the termination of that partnership and the formation of a new partnership "albeit with purposes similar to the first partnership and with some assets which had been the assets of the first partnership."
Simpson v. The Queen, 76 DTC 6350, [1976] CTC 600 (FCTD)
A partnership described by Addy, J. as consisting of a firm of chartered accountants ("Riddell Stead") and three individuals was found to have terminated when the three individuals withdrew.
Marksim Storage Ltd. v. MNR, 73 DTC 158, [1973] CTC 2185 (T.R.B.), rev'd 76 DTC 6401, [1976] CTC 665 (FCTD)
The sale by two of the four partners of a partnership that had realized a taxable gain of their partnership interests to a third-party purchaser did not dissolve the partnership, with the result that the selling partners were not subject to tax of their share of that gain. Mr. Cardin stated (pp. 161-162):
"I do not see any legal reason why the remaining partners cannot continue the partnership with the purchasers of the old partners' interests if it is their declared intention to do so as in the case in the present instance and, in my opinion, the Partnerships Act of Ontario at sections 32 and 33 provides for such a contingency."
Dolente v. MNR, 65 DTC 179 (TAB)
Mr. Fordham found that the assignment by two of the three partners of a partnership of their interests to a third party did not result in the dissolution of the partnership in light of the failure of the Partnership Act (Ontario) to include such an event as a cause for dissolution and after quoting a statement from Pollock's Law of Partnership in regard to The Partnership Act, 1890 (England) that:
"'Since the Act it seems that the assignment of a partner's share does not in any case work a dissolution of itself, or give the other partners an absolute right to have the partnership dissolved.'"
In addition, the continuing partner executed the assignment agreement, which provided that the partnership "shall not hereby for any purpose whatsoever be deemed to be terminated".
Alvarez v. Daly (1964), 48 WWR 611 (BCSC)
The past dealings of partners in a medical partnership of more than 20 members and other terms of the partnership agreement permitted Wootton J. to imply a term in the partnership agreement that the partnership was not to be dissolved at the instance of less than a majority of the partners.
Tait v. Winsby, [1943] 1 DLR 81 (PC)
A partnership of two individuals was found to have been formed for a single adventure (namely, the exploitation of some mining claims) in light of the lack of any reference in the partnership agreement to the provision of further capital or to the term of the partnership arrangement, and in light of the unsavoury character of one of the partner's with whom, therefore, the other would not have wanted an indefinite relationship. The partnership, therefore, was terminated when the mining claims were transferred to a company in consideration for shares.
Administrative Policy
26 January 2015 T.I. 2014-0545051E5 - Subsections 98(1) and 98.1(1)
In confirming a "concern" to this effect, CRA stated:
[P]aragraph 98(1)(a) would only deem a person who was a partner at the time the partnership ceased to exist not to have ceased to be a partner and thus would not apply to a former partner.
CRA then noted that s. 98.1 "may be applicable to a former partner who continues to have a residual interest in the partnership," and that in such circumstances generally "the former partner's partnership interest becomes a residual interest and the former partner is generally deemed not to have disposed of the interest until that specified time" (the later of its residual entitlement to partnership property being fully satisfied and the end of the dissolution year).
8 May 2014 T.I. 2014-0522771E5 - Whether a partnership has ceased to exist
Partner A sold his 50% partnership interest in a Quebec general partnership (the "Partnership") operating a grocery business in the province of Quebec to Partner B (also a Canadian-resident individual). The Partnership immediately disposed of all of its properties to a taxable Canadian corporation (the "Corporation") of which Partner B was the sole shareholder in consideration for the issuance of promissory notes and common shares (and elected under s. 85(2)) but with title to all assets staying the name of the Partnership. Partner B filed for dissolution of the Partnership under the Civil Code of Quebec (the "CCQ") more than 60 days after such disposition.
After indicating that "a partnership would generally cease to exist if there are no longer at least two partners carrying on the business…[and] the…CCQ…also contemplates a minimum of two persons as partners," CRA noted that s. 98(1) would deem the partnership to have not ceased to exist until all partnership property had been distributed.
16 March 2012 T.I. 2011-0423191E5 F -
Where on a winding-up of a partnership on a non-rollover basis, a member receives properties of the partnership with a fair market value lower than the adjusted cost base of the member's interest (held as capital property) then provided that the partnership is dissolved under the applicable provincial law and all property of the partnership has been distributed, the member can claim a capital loss on the disposition of the member's interest equal to the ACB of that interest as reduced by the fair market value of the property distributed on the interest.
31 January 1994 T.I. 5-932859
If the property of a partnership is not distributed at the time it ceases to exist, s. 98(1) will deem the partnership not to have ceased to exist until such time as all the partnership property has been distributed. In such case, unless an election is made under s. 99(2), the partnership's fiscal period will be deemed to have ended immediately before the time the partnership ceased to exist and on the subsequent distribution of partnership property there will be another fiscal period termination.
30 May 1991 T.I. (Tax Window, No. 3, p. 21, ¶1269)
The capital gain referred to in s. 98(1)(c) must be brought into income at the end of the fiscal period after the partnership actually ceased to exist. All the property of the partnership need not have been distributed in order for s. 98(1)(c) to apply.
88 C.R. - Q.19
The deemed gain arising under s. 98(1)(c) from the disposition of a partnership interest with a negative ACB will be realized at the end of the first fiscal period ending after the partnership in fact ceased to exist.
88 C.R. - Q.20
Where a partnership is in receivership, property held for distribution to creditors is considered to be "partnership property" until it is so distributed.
Articles
Jack Bernstein, "Real Estate Breakups", Tax Profile, Vol. 6, No. 1, January 2000, p. 1
Includes discussion of techniques for effecting the economic equivalent of the division of assets of partnership.
Fien, "Causes and Effects of the Dissolution and Winding-up of Partnership", 1981 Conference Report, p. 497.
Subsection 98(2) - Deemed proceeds
See Also
Mihelakos v. The Queen, 97 DTC 1450 (TCC)
A transaction that was documented in a confusing fashion was characterized as representing a sale by the taxpayer of his 1/2 interest in a partnership to purchasing partners, rather than a dissolution of the partnership followed by an asset sale. Hamlyn TCJ. applied (at p. 1453) the principle that "when documents are ambiguous or do not explain the whole transaction, the Court may look to other evidence as to what the parties intended".
Administrative Policy
T.I. 14 July 1999 T.I. 9917685
A Partnership which is held 30% and 70% by FA1 and FA, respectively (which are wholly-owned by Canco) is dissolved on a rollover basis undnr the tax laws of Country X. CRA stated:
[S]ubsection 98(2) would apply on the dissolution of Partnership. Therefore capital gains of Partnership and the adjusted cost base of the property transferred to FA1 and FA2 would be determined on the basis that Partnership's capital property was disposed of to FA1 and FA2 at its fair market value. … As property is distributed to FA1 and FA2 on the dissolution on a rollover basis under the tax law of Country X, there would be no "earnings" created as a result of the wind-up of FA1 and FA2.
21 May 1991 Memorandum (Tax Window, No. 3, p. 22, ¶1256)
Where new partners are found to contribute cash to a partnership which has encountered cash flow problems, and the capital accounts of the old partners are increased to recognize the fair market value of the assets, the increase in the capital accounts of the old partners should be taken as an indication that a new partnership was formed, with the result that a Canadian partner would have disposed of its interest in the old partnership, and s. 98(2) would deem the old partnership to have disposed of its property to its partners.
IT-457R "Election by Professionals to Exclude Work in Progress from Income"
Unless s. 85(3), 98(3) or 98(5) applies, a transfer of property (including work in progress of a professional practice subject to an election under s. 34) from a partnership to a partner or all partners is deemed to have been made at fair market value. RC will not object if additional income arising to the partnership from such a transfer is allocated to the withdrawing partner.
Subsection 98(3) - Rules applicable if partnership ceases to exist
Administrative Policy
10 October 2014 APFF Roundtable Q. 23, 2014-0538171C6 F
The s. 98(5) rollover is not available where one partnership is wound up into another. What are the consequences of a partnership (SENC) ceasing to exist under the Civil Code as a result of the acquisition by a single partner (which was an SENC itself) of all interests in the first partnership, so that all the first partnership's property became property of the second? CRA responded (TaxInterpretations translation):
One of the conditions stipulated in subsection 98(3) is that all the property of the partnership has been distributed to persons who were its partners immediately before its dissolution. …[S]uch condition is not satisfied [here] because the other partners would not receive any property of the partnership on its dissolution.
6 October 2014 T.I. 2014-0540611E5 - subsection 98(3) election
Will an election under s. 98(3) be valid and apply to all of a partnership's properties (which were distributed in accordance with the s. 98(3) requirements) if the election was filed in prescribed form but failed to include a particular property of the partnership? CRA responded:
Subsection 98(3)… contemplates an election "in respect of the property". …[T]he reference to "the property" is a reference to the phrase "all the partnership property" earlier in the preamble… . Accordingly, an election under subsection 98(3)… is not valid unless the election is made in respect of all of the property of the partnership.
The election under subsection 98(3)… is not among the elections listed in [Reg.] 600… . Accordingly, there is no discretion to permit an amended election under subsection 98(3)… .
5 September 2002 T.I. 2002-014731
"Subsection 98(3) of the Act may apply even though one or all of the members of the particular partnership are partnerships".
2000 Ruling 2000-002842
S.98(3) would apply to the winding-up of a partnership notwithstanding that the general partner (which was entitled to 0.01% of income of the partnership) had a 0% undivided interest in each property of the partnership on its cessation.
93 CPTJ - Q.13
RC will not depart from the requirement that each former partner receive an appropriate undivided interest in each property distributed on the dissolution of the partnership.
The cost to a former partner of an undivided interest in a particular Canadian resource property is nil in light of the definition of cost amount.
18 May 1990 T.I. (October 1990 Access Letter, ¶1470)
The s. 98(3) election is not available when the partners received a divided part of the property of the partnership.
19 September 89 T.I. (February 1990 Access Letter, ¶1112)
If the two corporate partners of a partnership (A and B) dissolve the partnership under s. 98(3), the subsequent amalgamation of the two corporations will not result in the application of s. 98(2).
88 C.R. - F.Q.22
Where the only asset of a partnership is identical units in another partnership, s. 98(3) requires each partner on dissolution to receive an undivided interest in each unit, rather than a separate unit.
84 C.R. - Q.89
even where the only partnership property is identical shares in a corporation, RC cannot accept a pro rata distribution of shares instead of a pro rata distribution of percentage interests in each share.
IT-471R "Merger of Partnerships"
IT-457R "Election by Professionals to Exclude Work in Progress from Income" under "Transfers of Work in Progress"
Canadian partnerships can be merged through utilizing ss.98(3) and 97(2).
Forms
Subsection 98(5) - Where partnership business carried on as sole proprietorship
See Also
Canada Life Insurance Co. of Canada v. A.G of Canada, 2015 ONSC 281
In order that the applicant ("CLICC") could realize an accrued capital loss on its 99% limited partner interest in a subsidiary limited partnership ("MAM LP"):
- On December 7, 2007, MAM LP distributed an asset to CLICC and a wholly-owned subsidiary of CLICC ("CLICC GP") based on their respective 99% and 1% interests.
- On December 31, 2007, the interests of CLICC and CLICC GP in MAM LP were cancelled and MAM LP distributed all its remaining property (other than $100 of limited partner capital) pro rata to CLICC and CLICC GP.
- One hour later, MAM LP was dissolved and immediately thereafter, the remaining $100 of partnership capital was distributed pro rata to CLICC and CLICC GP.
- At 11:59 p.m., CLICC GP was wound up and its assets and liabilities acquired and assumed by CLICC.
- CLICC GP was formally dissolved on October 14, 2008.
After CRA assessed to deny the loss claimed by CLICC on the basis that the s. 98(5) rollover applied, the applicant successfully applied for the transactions in 2 to 4 to be rectified so that s. 98(5) could not apply (entailing a distribution on December 31 of some of the partnership property to both CLICC and CLICC GP, a transfer of CLICC's LP interest to CLICC GP, a resulting wind-up of MAM LP into CLICC GP also on December 31, 2007 and the wind-up of CLICC GP into CLICC on April 30, 2008 (i.e., more than 3 months after December 31.)
See summary under General Concepts - Rectification.
Stefanson Farms Ltd. v. The Queen, 2009 DTC 177, 2008 TCC 682
Pursuant to an agreement dated October 16, 1998, the taxpayer acquired a 99% interest in a partnership from its shareholder effective January 1, 1998, and then on January 3, 1998, it purchased the other 1% interest in the partnership. In finding that the taxpayer satisfied the requirement that, in order for s. 98(5) to apply, it had conducted the partnership business during the relevant two-day period, Woods, J. noted that the Courts have given short shrift to attempts by taxpayers to disavow their own written documents, and that the evidence provided to her was not sufficient for her to conclude that no partnership business was conducted during the two-day period.
Administrative Policy
2 December 2014 Folio S4-F7-C1
1.43 …[W] here a Canadian partnership ceases to exist because of an amalgamation involving one or more of the corporate partners:
- subsection 98(5) will not be applicable to provide a rollover where the new corporation will carry on the business of the former partnership and
- subsection 98(6) will not be applicable to provide a rollover where a new partnership is formed having the new corporation as one of its partners.
This problem can generally be avoided by having the partnership dissolve prior to the amalgamation with each partner receiving undivided interests…in the partnership property so as to be eligible for the rollover under subsection 98(3). …Where it is proposed that the new corporation enter into a Canadian partnership, the rollover provided in subsection 97(2) may be available.
8 September 2014 T.I. 2014-0529231E5 - Partnership to Sole Proprietorship
General description of application of s. 98(5) respecting a farm partnership which would be continued by one of the member sons as a sole proprietorship.
20 September 2012 T.I. 2012-0452411E5 - Manner of filing 98(5)(c) designations
After stating that a 98(5) designation must be filed with the proprietor's income tax return for the year in which the proprietor received partnership property, CRA stated:
Further, although the Act does not provide any mechanism for late-filed or amended designations under paragraph 98(5)(c) of the Act, the Canada Revenue Agency (the "CRA") may, at its discretion, accept such designations depending on the facts of the particular situation. A request to accept a late-filed or amended election under paragraph 98(5)(c) of the Act should be made in writing to the local Tax Services Office.
4 July 2012 T.I. 2011-0429601E5 F
Before going on to indicate that CRA was generally of the view that two partnerships could merge by winding-up under s. 98(5) with the former partners then contributing the former partnership property to a single partnership utilizing s. 97(2), CRA indicated that it was not "impossible" that two partnerships could also merge by the first partnership contributing its property to the second partnership utilizing s. 97(2), with the first partnership then being wound up undcr s. 98(3). The first partnership would be considered to be a taxpayer for purposes of being able to access s. 97(2) on the first of these two transactions.
28 June 2012 T.I. 2011-0427871E5 F
Mr and Mrs X were the members of a farming partnership. Upon their separation the partnership began renting the land. The partnership ceased to exist when under the separation agreement, Mrs. X transferred her partnership interest to Mr X, with the land continuing to generate rental income, now for Mr X.
CRA confirmed its position that real property rental constitutes a business for s. 98(5) purposes, stating (TaxInterpretations translation):
..we reiterate our long-standing position to the effect that the activity by a partnership of renting real estate consitutes a business strictly ("uniquement") for the purposes of the application of subsection 98(5). Consequently, if all the conditions contemplated in subsection 98(5) are satisfied, we are of the opinion that this subsection can apply on the transfer of rental lands in favour of Mr, on the basis that he is a partner who continues the activity of renting the lands.
25 June 2012 T.I. 2011-0403001E5 -
In response to an inquiry as to whether the deeming by s. 98(5) of partnership property to be disposed of before the partnership ceased to exist (with the partnership year end also being deemed by s. 99(1) to occur immediately before the partnership ceased to exist) results in no capital cost allowance being available to the partnership for that year, CRA indicated that this mooted problem did not arise:
Subsection 98(1) applies for the purpose of paragraph 98(5)(f) but not for the purposes of subsection 99(1). Generally, therefore, it is our view that the application of paragraph 98(5)(f) would be deferred until after the partnership has ceased to exist under provincial partnership law and after the application of subsection 99(1). It follows then that the partnership would have had the partnership property at the deemed year-end created under subsection 99(1), and could claim CCA on the asset for that fiscal year.
31 May 2012 T.I. 2011-0426091E5
A partnership was leasing property from a partner, and then is wound up as described in s. 98(5), with the former partner continuing to use the particular property in the business of the terminated partnership. If the leasehold interest is extinguished by merger, s. 98(5) would not apply to the leasehold interest. The terminated partnership would be considered to have disposed of its leasehold interest for nil proceeds of disposition (having regard to the BCN case, 79 DTC 5068), thereby resulting in a terminal loss.
14 March 2012 T.I. 2011-0422551E5 F
a Canadian-controlled private corporation which operates a seniors residence is leased the residence by a limited partnership of which it is a partner. Upon the acquisition of all the other partnership interests in the partnership, the partnership ceases to exist so that the CCPC becomes the owner of the residence.
S. 98(5) does not apply to the winding-up of the partnership as the previous rental operation is not carried on by the CCPC.
2010 Ruling 2009-0347301R3 -
Debt owing by a limited partnership to its limited partner is converted into equity; and the limited partnership (which has a large number of depreciable properties in different classes) then is wound up under s. 98(5), by its general partner being wound-up as described in s. 88(1) into the limited partner.
Ruling that s. 13(21.2) will not apply to the transfer of the depreciable properties by the limited partnership to the limited partner. The issue summary states:
Although there is no specific rule in the Act that provides an exception to the application of subsection 13(21.2) in the case of a rollover under subsection 98(5), this provision would not apply to the particular circumstances set out in the ruling.
9 July 2009 T.I. 2008-0275151E5
Where a top-tier general partnership holding an interest in a lower-tier partnership is wound-up so that the surviving partner of the former top-tier partnership receives the partnership interest in the lower-tier partnership, the application of s. 98(5) will not be precluded simply because, prior to ceasing to exist, the top-tier partnership's only asset was the interest in the lower-tier partnership. S.98(5) also would be available where, prior to its wind-up, the only activity of the top-tier partnership was ownership of shares of a corporation.
26 January 2001 T.I. 2000-006072 -
S.98(5) does not apply where the "person" who continues to carry on the business of the former partnership is, itself, a partnership. S.102(2) "is a limited deeming provision and does not deem the partnership that continues the business to be either 'one' person or to carry on 'alone' the business ... ."
7 October 1994 A.P.F.F. Round Table, Q. 38, No. 5M08340
"The Department considers that operation of a rental building by a partnership is a business for the purposes of applying subsection 98(5) ... . However, this position ... does not change the nature of the income to its recipient for other purposes of the Act."
5 November 1991 Memorandum (Tax Window, No. 13, p. 2, ¶1587)
No rollover will be available where a partnership ceases to exist as the result of all the corporate partners amalgamating.
27 September 1991 T.I. (Tax Window, No. 11, p. 16, ¶1511)
Trade receivables of a cash basis farming partnership which are outstanding at the time the partnership ceases to exist will not be included in the partnership's income for its final fiscal year.
18 April 1990 T.I. (September 1990 Access Letter, ¶1425)
Where B disposes of its partnership interest to the other partner, A, with the result that the partnership ceases to exist, then in order to satisfy the requirement that A continue to use the property in the business, A must carry on the business for a reasonable length of time. [C.R: 53(1)(e)(i)]
19 September 89 T.I. (February 1990 Access Letter, ¶1112)
Corporations A and B which together carry on a partnership wish to amalgamate. S.98(5) will not apply if prior to the amalgamation A transfers its partnership interest to B, B liquidates the partnership business and A and B amalgamate, because in order for s. 98(5) to apply it will be necessary for B to carry on by itself the business that was the business of the partnership.
89 C.R. - Q.35
Where one partner of a two-person partnership dies, RC considers that "immediately before the partnership ceases to exist" is immediately before the death of the partner.
IT-338R "Partnership Interest - Effects on Adjusted Cost Base Resulting from the Admission or Retirement of a Partner"
Discussion of assumption of mortgage indebtedness by the continuing partner.
Articles
Perry Truster, "Windup-Bump Comparison: Subsections 98(3) and (5)", Tax for the Owner-Manager (Canadian Tax Foundation), Vol. 15, No. 1, January 2015, p. 8.
Bump of real estate inventory (p. 9)
How does subsection 98(5) work when the real estate was inventory to the partnership (which intended to develop it as, say, a shopping plaza for resale) but capital property to the proprietor (which intends to develop it into a shopping plaza for retention)? Does the fact that the proprietor must continue to use the property in the course of the business imply that the partnership must have "used" the property in the partnership business? ln Qualico (84 DTC 6119 (FCA)), a minority opinion stated that unsold inventory is not "used" in a business; inventory is used only when it is sold. As a consequence, if the real estate is inventory to the former partnership, the application of subsection 98(5) is not entirely clear.
What is clear is that subsection 98(5), unlike subsections 88(1) and 98(3), will bump the tax value of the property only if the property is non-depreciable capital property to the proprietor after the winding up.
Subsection 98(6) - Continuation of predecessor partnership by new partnership
Administrative Policy
30 June 2014 T.I. 2014-0522181E5 F - Legal status of partnership and application of 98(6)
Does s. 98(6) apply when a limited partnership becomes a general partnership following the dissolution of its sole corporate general partner? CRA stated (TaxInterpretations translation):
[A]ll the partners of the new partnership must have been partners of the predecessor partnership immediately before the transfer. Furthermore, when a partner withdraws and it received part of the property of the predecessor partnership before the predecessor partnership ceased to exist, …CRA…will consider that all the property of the predecessor partnership will have been transferred to the new partnership if all the property has been directly transferred to the new partnership immediately after the settlement of the interest of the outgoing partner.
9 September 2005 T.I. 2005-012677
In the situation where all the property of the predecessor partnership other than property necessary to "pay out" a retiring partner is transferred to a new partnership, CA will consider the "all of the property" requirement to be satisfied if all of the property of the old partnership was transferred directly by the predecessor partnership to the new partnership immediately after the settlement of the outgoing partner's interest.
90 C.R. - Q29
Where s. 98(6) applies, any negative ACB of a partnership interest of a member will continue as an element of the ACB of his new partnership interest.
89 C.R. - Q34
Where s. 98(6) applies, any negative adjusted cost base of a partnership interest of a member in the predecessor partnership will be included in computing the adjusted cost base of his new partnership interest and will not be subject to s. 98(1)(c).
IT-338R "Partnership Interests - Effects on Adjusted Cost Base Resulting from the Admission or Retirement of a Partner"
All of the property" means all the property after the settlement of a retired partner's interest.