I-3 - Taxation Act

Section 264.0.2 Disposition versions

2006-03-01

264.0.2. Where a taxpayer sustains a loss on the settlement or extinguishment of a commercial obligation, within the meaning assigned by section 485, issued by a person or partnership and payable to the taxpayer, the loss, where the consideration given by the person or partnership for the settlement or extinguishment of the obligation consists of one or more other commercial obligations issued by the person or partnership to the taxpayer, is deemed to be the amount determined by the formula

A × [(B − C) / B].

For the purposes of the formula in the first paragraph,

(a)  A is the amount of the taxpayer’s loss, otherwise computed, from the disposition of the commercial obligation;

(b)  B is the total fair market value of the consideration given by the person or partnership for the settlement or extinguishment of the commercial obligation; and

(c)  C is the total fair market value of the other commercial obligations.

1996, c. 39, s. 81; 1997, c. 3, s. 71.