9 - Recoupment Flashcards
when is there a s8(4)(k) deemed disposal?
at MV
- dist in specie
- donation of asset
- TS no longer used as TS
- asset disposed to connected person
under which scenarios can recoupment be deferred?
both CG and recoupment will be deferred
- involuntary disposal
- re-investment in replacement asset
what are the requirements for involuntary disposal deferral?
- amt >= proceeds used on repl
- proceeds >= base cost
- contract concl. within 12 mon
- repl. BIU within 3 years of disp
- disposal bc law / theft
- not deemed disp
- asset = s9(2)(j/k)
what if not all the involuntary disposal requirements are met?
then the taxpayer can try to apply para 66 instead
what if the replacement asset is depreciable?
we tax the recoupment and CG in proportion to the allowances claimed for the replacement asset
what if the replacement asset is non-depreciable?
we tax the CG / recoup when repl. asset is disposed of
what if we dispose of the depr. repl. asset before end of its UL?
the residual recoup/CG is included in I
what are the para 66 requirements?
- amt >= proceeds used on repl
- proceeds >= base cost
- contract concl. within 12 mon
- repl. BIU within 3 years of disp
- asset disp. qualified for allowance
- not deemed disp
- asset = s9(2)(j/k)
what if more than one replacement asset is purchased?
we ratio the CG and recoupment at the amt of each/total amount spent on the repl.
to which assets will the deferral of recoupment not apply?
personal use assets
what if the entity stops using one of the replacement assets?
the portion of the R/CG for that repl. asset will be included for that year
