I-3 - Taxation Act

Section 532 Disposition versions

2006-03-01

532. The cost to each member of the partnership of each property received or receivable by the member as consideration for the disposition of the member’s partnership interest on the winding-up of the partnership is deemed to be

(a)  in the case of property other than a share of the capital stock of the corporation or a right to receive such share, the fair market value of that property at the time of the winding-up;

(b)  in the case of a preferred share of a given class of the capital stock of the corporation that was not accompanied by a common share, the amount determined under subparagraph ii and, if it was accompanied by a common share, the lesser of:

i.  the fair market value, immediately after the winding-up, of such preferred share of that class which he receives or has the right to receive; and

ii.  that proportion of the excess of the adjusted cost base to him of his partnership interest immediately before its winding-up over the aggregate of the fair market value, at the time of winding-up, of the consideration contemplated in paragraph a and received by him from the disposition of his partnership interest, that the fair market value, immediately after the winding-up, of such preferred share of that class that he so receives or has the right to receive is of the fair market value, at the same time, of all preferred shares of the capital stock of the corporation which he receives or also has the right to receive as consideration for the disposition; and

(c)  in the case of a common share of a given class of the capital stock of the corporation, an amount equal to that proportion of the amount by which the adjusted cost base to him of his partnership interest immediately before the winding-up exceeds the aggregate of the fair market value, at the time of disposition, of the property contemplated in paragraph a that he receives for the disposition, and the cost to him of all the preferred shares he has the right to receive for the disposition, that the fair market value, immediately after the disposition, of that common share of that class is at the same time of the fair market value of all the common shares of the capital stock of the corporation he receives or has the right to receive as consideration for the disposition.

1972, c. 23, s. 414; 1984, c. 35, s. 15; 1996, c. 39, s. 273; 1997, c. 3, s. 71; 2000, c. 5, s. 121.