Losses on the Disposition of Property Involving an Affiliated Person

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A loss sustained by the trust on the disposition of property involving an affiliated person is not deductible. However, the loss may give rise to a carry-over mechanism, with rules that vary according to whether the property concerned is depreciable property or non-depreciable property.

Such a loss is deductible in certain circumstances, such as when:

  • the trust is deemed to have disposed of:
    • property further to its immigration or emigration, or further to a change in use of the property,
    • a stock option that has expired,
    • a debt that has become a bad debt,
    • a share issued by a corporation that has gone bankrupt or that was insolvent at the time it was wound up;
  • the trust is exempt or ceases to be exempt from Québec income tax within 30 days following the disposition of the property.

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