,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,capital ,co/ ,all[.e--,l1sehold
  ,9t]e/s
,numb]3 ,,it-#dfd;,r
,date3 ,octob] #be1 #aihe
,ref];e3 ,p>agraph #bj7#a77a7 &
  subsec;ns #ac7#e.a7 & #bj7#af7 7al
  subsec;ns #aajj7#b.a71 #aajb7#d7 &
  7#e7 & p>agraph #aajj7#a77b7 & ,s*$ule
  ,,iii (! ,9come ,tax ,regul,ns7

  ,at ! ,canada ,cu/oms & ,rev5ue ,ag5cy
7,,ccra71 we issue 9come tax 9t]pret,n
bullet9s 7,,it's7 9 ord] 6provide
te*nical 9t]pret,ns & posi;ns reg>d+
c]ta9 provi.ns 3ta9$ 9 9come tax law4
,due 6_! te*nical nature1 ,,it's >e us$
prim>ily 0\r /aff1 tax speciali/s1 & o!r
9dividuals :o h an 9t]e/ 9 tax matt]s4
,= ^? r1d]s :o pref] a less           #a
              ,,it-#dfd;,r           a#a
te*nical explan,n (! law1 we (f] o!r
public,ns1 s* z tax guides & pamphlets4
  ,:ile ! -;ts 9 a "picul> p>agraph 9 an
,,it may relate 6provi.ns (! law 9 =ce
at ! "t !y 7 made1 s* -;ts >e n a
sub/itute =! law4 ,! r1d] %d1 "!=e1
3sid] s* -;ts 9 li<t (! relevant
provi.ns (! law 9 =ce =! "picul> tax,n
ye> 2+ 3sid]$1 tak+ 96a3.t ! e6ect ( any
relevant am5d;ts 6^? provi.ns or
relevant c\rt deci.ns o3urr+ af ! date
on : ! -;ts 7 made4
  ,subject 6! abv1 an 9t]pret,n or
posi;n 3ta9$ 9 an ,,it g5],y applies z
(! date on : x 0 publi%$1 un.s o!rwise
specifi$4 ,if "! is a subsequ5t *ange 9
t 9t]pret,n or posi;n &! *ange is
b5eficial 6taxpay]s1 x is usu,y e6ective
= future assess;ts & reassess;ts4 ,if1
on ! o!r h&1 ! *ange is n fav\ra#
6taxpay]s1 x w norm,y 2 e6ective =!
curr5t & subsequ5t tax,n ye>s or =
transac;ns 5t]$ 96af ! date on : ! *ange
is publi%$4                           #b
              ,,it-#dfd;,r           b#a
  ,mo/ ( \r public,ns >e availa# on \r
,web site at3 _+www.ccra.gc.ca_:
  ,if y h any -;ts reg>d+ matt]s 4cuss$
9 an ,,it1 pl1se s5d !m to3

  ,manag]1 ,te*nical ,public,ns &
    ,projects ,sec;n
  ,9come ,tax ,rul+s ,directorate
  ,policy & ,legisl,n ,bran*
  ,canada ,cu/oms & ,rev5ue ,ag5cy
  ,ottawa ,,on ,k#a;,a #j;,l#e
  
or 0email at ! foll[+ a4ress3
_+bulletins@ccra.gc.ca_:









                                      #c
                 ,3t5ts              c#a
    
,applic,n
,4cus.n & ,9t]pret,n
  ,g5]al 7p>agraphs #a-b7
  ,acquisi;n (a ,l1sehold ,9t]e/
    7p>agraphs #c-d7
  ,capital ,co/ (a ,l1sehold ,9t]e/
    7p>agraphs #e-h7
  ,4posi;n (a ,l1sehold ,9t]e/
    7p>agraphs #i-aa7
  ,,cca ,-put$ ,"u ,s*$ule ,,iii
    7p>agraphs #ab-ai7
  ,build+s or ,/ructures 7p>agraphs
    #bj-bb7
  ,app5dix ;,i
  
               ,applic,n
    
  ,? bullet9 replaces & c.els ,,it-#dfd
dat$ ,decemb] #h1 #aihj4 ,curr5t revi.ns
>e designat$ 0v]tical l9es4


                                      #d
          ,4cus.n & ,9t]pret,n       d#a
    
        ,g5]al 7p>agraphs #a-b7
    
#a4 ,subject 6p>agraphs #aajj7#b.a77f7
  7see #b 2l7 & #aajj7#b.b77i7 7see !
  curr5t v].n ( ,,it-#bhe 7;i771
  p>agraph #aajj7#a77b7 (! ,regul,ns
  provides t a taxpay] may claim 9 a
  tax,n ye> an am.t ( capital co/ all[.e
  9 respect ( prop]ties 9 ,class #ac (
  ,s*$ule ,,ii t does n exce$ ! a7regate
  (

7;i7 ,correct$ on ,june #i1 #bjjc

  7a7 #ej@3p (! am.t calculat$ 9 a3ord.e
    ) ,s*$ule ,,iii ": ! capital co/s (!
    prop]ties 7 9curr$ 9 ! "picul> tax,n
    ye> & af ,novemb] #ab1 #aiha1 &
  7b7 ! am.t calculat$ 9 a3ord.e )
    ,s*$ule ,,iii 7see #ab 2l7 9 all o!r
    cases4
  
                                      #e
              ,,it-#dfd;,r           e#a
  ,! prop]ty 9clud$ 9 class #ac is
  prop]ty t is a l1sehold 9t]e/ except
  7c7 an 9t]e/ 9 m9]als1 petroleum1
    natural gas1 o!r relat$ hydroc>bons
    or timb] & prop]ty relat+ "!to or 9
    respect (a "r 6explore =1 drill =1
    take or remove m9]als1 petroleum1
    natural gas1 o!r relat$ hydroc>bons
    or timb]1
  7d7 t "p (! l1sehold 9t]e/ t is 9clud$
    9 ano!r class 0r1son ( subsec;n
    #aajb7#e7 (! ,regul,ns 7see #bj 2l71
    or
  7e7 a prop]ty t is 9clud$ 9 class #bc4
--------------------------------------#b
#b4 ,! #ej@3p rule 9 #a7a7 abv is n
  applica# 6a l1sehold 9t]e/ ! capital
  co/ ( : 0 acquir$ or 9curr$ af
  ,novemb] #ab1 #aiha & 2f #aihc if any
  (! foll[+ 3di;ns apply3
  7a7 ,! taxpay] 0 obligat$ 6acquire !
    l1sehold 9t]e/ "u t]ms ( an agree;t
    9 writ+ 5t]$ 962f ,novemb] #ac1
    #aiha4                            #f
              ,,it-#dfd;,r           a#b
  7b7 ,! taxpay] or a non->m's l5g?
    p]son -m;ed ! 3/ruc;n1 manufacture
    or produc;n ( l1sehold improve;ts 2f
    ,novemb] #ac1 #aiha4
  7c7 ,! taxpay] or a non->m's l5g?
    p]son _h made >range;ts evid;ed 9
    writ+ =! 3/ruc;n1 manufacture or
    produc;n ( l1sehold improve;ts t 7
    sub/anti,y adv.ed 2f ,novemb] #ac1
    #aiha &! 3/ruc;n1 manufacture or
    produc;n -m;ed 2f ,june #a1 #aihb4
  7d7 ,! taxpay] 0 obligat$ 6acquire !
    l1sehold 9t]e/ "u ! t]ms ( an
    agree;t 9 writ+ 5t]$ 962f ,june #a1
    #aihb ": >range;ts1 evid;ed 9 writ+1
    = l1s+ ! prop]ty or ! acquisi;n (
    l1sehold improve;ts 7z ! case may
    be7 7 sub/anti,y adv.ed 2f ,novemb]
    #ac1 #aiha4
  
  


                                      #g
        ,acquisi;n (a ,l1sehold      b#b
        ,9t]e/ 7p>agraphs #c-d7
    
#c4 ,a l1sehold 9t]e/ is ! 9t]e/ (a
  t5ant 9 any l1s$ tangi# prop]ty4 ,a
  t5ant :o l1ses prop]ty acquires a
  l1sehold 9t]e/ 9 t prop]ty reg>d.s (
  :e!r or n any capital co/ is 9curr$ 9
  respect ( t 9t]e/4 ,h["e1 a deprecia#
  prop]ty is n 3sid]$ 6h be5 acquir$
  until a capital co/ has be5 9curr$ 9
  respect ( t prop]ty4 ,x is nec
  6det]m9e ) reg>d 6c]ta9 app>5t l1s+
  agree;ts1 :e!r ^! agree;ts >e 9 sub/.e
  l1s+ agree;ts or agree;ts ei =!
  pur*ase (! prop]ty or = loans4 7;ii7

7;ii7 ,ref];e 6,,it-#bcc;,r has be5
  delet$ s9ce ? bullet9 0 c.ell$ 0!
  ,9dex 6,9come ,tax ,9t]pret,n
  ,bullet9s & ,te*nical ,news dat$
  ,decemb] #ca1 #bjja4


                                      #h
              ,,it-#dfd;,r           c#b
#d4 ,a t5ant :o has acquir$
  7a7 an assign;t (a l1s$ prop]ty or a
    "p (a l1s$ prop]ty1 or
  7b7 a subl1se on a l1s$ prop]ty1
  is 3sid]$ 6h acquir$ a l1sehold 9t]e/4

       ,capital ,co/ (a ,l1sehold
        ,9t]e/ 7p>agraphs #e-h7
    
#e4 ,! capital co/ (a l1sehold 9t]e/ (
  class #ac prop]ty 9cludes
  7a7 an am.t t a t5ant exp5ds 9 respect
    ( improve;ts or alt],ns 6a l1s$
    prop]ty t >e capital 9 nature1 o!r
    ?an improve;ts or alt],ns t >e
    9clud$ z a build+ or /ructure
    pursuant 6subsec;n #aajb7#e7 7see
    #bj 2l71 &
  7b7 an am.t t a t5ant exp5ds 6obta9 or
    ext5d a l1se or subl1se or pays 6!
    l&"l 6p]mit ! subl1se (! prop]ty4
#f4 ,c]ta9 am.ts pd 0a t5ant 9 respect
  (a l1se >e n 3sid]$ 6=m "p (! capital
                                      #i
              ,,it-#dfd;,r           d#b
  co/ (a l1sehold 9t]e/4 ,examples ( ^!
  >e z foll[s3
  7a7 an am.t pd 0a t5ant 6c.el a l1se
    7see ! curr5t v].n (
    ,,it-#cei 7;iii771 &
  
7;iii7 ,correct$ on ,june #i1 #bjjc

  7b7 an am.t pd 0a t5ant 9 lieu ( r5t
    or z a prepay;t ( r5t 7see ! curr5t
    v].n ( ,,it-#bfa 7;iv774
  
7;iv7 ,correct$ on ,june #i1 #bjjc

#g4 ,a l1sehold 9t]e/ does n 9clude !
  co/ ( alt],ns or improve;ts made 0!
  l&"l (a prop]ty at ! reque/ (! t5ant4
  ,s* co/s >e ei exp5ses (! l&"l or
  subject 6capital co/ all[.e dep5d+ on
  :e!r !y 3/itute a curr5t exp5se or a
  capital exp5diture4
#h4 ,:5 a t5ant makes improve;ts &
  alt],ns 6l1s$ prop]ty & subsequ5tly
  ab&ons !m1 !y >e n 3sid]$ 6h be5   #aj
              ,,it-#dfd;,r           e#b
  acquir$ 0! l&"l z a gift1 2que/ or
  9h]it.e "u p>agraph #fi7#a77c74 ,!
  l&"l is1 "!=e1 n 5titl$ 6claim capital
  co/ all[.e 9 respect ( s* prop]ty4

      ,4posi;n (a ,l1sehold ,9t]e/
           7p>agraphs #i-aa7
    
#i4 ,! "t ( 4posi;n (a l1sehold 9t]e/ 0a
  t5ant 9cludes
  7a7 ! "t ( expir,n (a l1se if x is n
    renew$1 except ": ! taxpay] 3t9ues
    6o3upy ! premises on a p]iodic
    t5ancy or o!r 3t9u+ basis1
  7b7 ! "t ( c.ell,n (a l1se if x is
    prior 6! expir,n date1
  7c7 ! "t ( an assign;t 0! t5ant (a
    l1se b n 9clud+ ! sublett+ (a l1s$
    prop]ty 7! sublett+ (a l1s$ prop]ty
    is 3sid]$ 6be a "pial 4posi;n (a
    l1se71 &
  7d7 ! "t (a 3v].n (a l1sehold 9t]e/ 6a
    freehold 9t]e/4
                                     #aa
              ,,it-#dfd;,r           f#b
#aj4 ,": a l1sehold 9t]e/ is 4pos$ (&
  proce$s ( 4posi;n1 if any1 >e less ?an
  ! undepreciat$ capital co/ at ! 5d (!
  ye> 9 class #ac1 a t]m9al loss "u
  subsec;n #bj7#af7 is deducti# provid$
  ! lessee 4poses ( all l1sehold 9t]e/s
  9 class #ac 0! 5d ( t ye> & does n
  acquire deprecia# prop]ty t is a
  l1sehold 9t]e/ 2f ! 5d (! ye>4 7;v7

7;v7 ,modifi$ 0,correc;n ,%eet ,,cs #bd
  dat$ ,april #bj1 #bjja

#aa4 ,": a t5ant1 :o has a l1sehold
  9t]e/ 9 a prop]ty1 acquires [n]%ip ( t
  prop]ty af ,m>* #ca1 #aigg1 subsec;n
  #ac7#e.a7 provides t
  7a7 ! l1sehold 9t]e/ is deem$ 6h be5
    4pos$ ( 0! taxpay] at ! "t (!
    acquisi;n (! prop]ty = proce$s equal
    6! capital co/ (! l1sehold 9t]e/
    m9us ! capital co/ all[.e all[$ 9
    respect "!( 2f t "t1
                                     #ab
              ,,it-#dfd;,r           g#b
  7b7 ! prop]ty acquir$ is deem$ 6be
    deprecia# prop]ty (a prescrib$ class
    (! taxpay] acquir$ at t "t1 & 6! co/
    ( t prop]ty is 6be a4$
--------------------------------------#c
    ! capital co/ (! l1sehold 9t]e/
    immly 2f ! deem$ 4posi;n ( x1 &
  7c7 ! a7regate capital co/ all[.e
    all[$ 6! taxpay] 2f t 4posi;n 9
    respect (! l1sehold 9t]e/ is 6be a4$
    6! capital co/ all[.e all[$ 6!
    taxpay] 2f t "t 9 respect (! class
    6: ! acquir$ prop]ty 2l;gs4
  
     ,,cca ,-put$ ,"u ,s*$ule ,,iii
           7p>agraphs #ab-ai7
    
#ab4 ,sec;n #b ( ,s*$ule ,,iii requires
  t a calcul,n ( "o or m 8prorat$
  por;ns0 2 made 7see #ac 2l7 9 respect
  ( ea* l1sehold 9t]e/ (a taxpay]4
  ,sec;n #a ( ,s*$ule ,,iii limits !
  capital co/ all[.e =a tax,n ye> 6!
  lessor (                           #ac
              ,,it-#dfd;,r           a#c
  7a7 ! sum (! prorat$ por;ns calculat$
    9 a3ord.e )! rules & limit,ns
    describ$ 9 #ac 6#ag 2l1 &
  7b7 ! undepreciat$ capital co/ (! :ole
    ( class #ac 2f any all[.e = t ye> is
    deduct$4
  
  ,6reflect ! limit,n impos$
  0subp>agraph #aajj7#a77b77;i71 7a7 abv
  %d 2 r1d z #ej@3p (! am.t o!rwise
  calculat$ ) respect 6an exp5diture
  9curr$ af ,novemb] #ab1 #aiha 7if n
  subject 6! transi;nal rules describ$ 9
  #b abv nor ! rule 3ta9$ 9 p>agraph
  #aajj7#b.b77i7 (! ,regul,ns7 =! ye> 9
  : ! exp5diture is 9curr$4
#ac4 ,sec;n #b ( ,s*$ule ,,iii provides
  t = purposes ( det]m9+ ! 8prorat$
  por;n01 ! capital co/ 9curr$ 0!
  taxpay] 9 a "picul> tax,n ye> 9
  respect ( any "picul> l1sehold 9t]e/
  [n$ 0! taxpay] is tr1t$ sep>ately &
  ea* s* seg;t ( capital co/ is ref]r$
  6in ? bullet9 z a 8unit (          #ad
              ,,it-#dfd;,r           b#c
  capital co/04 ,a 8prorat$ por;n0 9
  respect (a unit ( capital co/ is
  det]m9$ z ! lessor (
  7a7 "o-fif? (! unit ( capital co/1 &
  7b7 ! am.t det]m9$ 0divid+ ! unit (
    capital co/ 0! numb] ( #ab-mon?
    p]iods 7n exce$+ #dj s* p]iods7
    fall+ )9 ! p]iod -m5c+ )! 2g9n+ (!
    "picul> tax,n ye> 9 : ! capital co/
    0 9curr$ & 5d+ )! "d ! l1se is
    6t]m9ate4
  
  ,al? sec;n #c sets \ fur!r rules
  a6ect+ ! -put,n ( prorat$ por;ns z
  4cuss$ 9 #ad 6#ag 2l1 ! actual -put,n
  (! prorat$ por;n (a "picul> unit (
  capital co/ is made only once4
  ,capital co/s 9curr$ 9 a subsequ5t
  tax,n ye> 9 respect (! same l1sehold
  9t]e/ w 3/itute ano!r unit ( capital
  co/ requir+ -put,n ( ano!r prorat$
  por;n4 ,simil>ly1 a sep>ate -put,n is
  requir$ = capital co/s 9curr$ 9 ! same
  tax,n ye> = ea* l1sehold 9t]e/4    #ae
              ,,it-#dfd;,r           c#c
#ad4 ,0r1son ( p>agraph #c7a7 ( ,s*$ule
  ,,iii &=! purposes ( sec;n #b only1
  capital co/s 9curr$ 9 respect (a
  "picul> l1sehold 9t]e/ 9 a tax,n ye>
  prec$+ ! "o 9 : ! 9t]e/ 0 acquir$ >e
  deem$ 6h be5 9curr$ 9 ! latt] ye> & w
  2 9clud$ 9 ! same unit ( capital co/ z
  any co/s actu,y 9curr$ 9 t latt] ye> 9
  respect ( t 9t]e/4 8,! tax,n ye> 9 : !
  9t]e/ 0 acquir$0 %d 2 r1d z ref]r+ 6!
  tax,n ye> 9 : ! taxpay] 5t]$
  96posses.n (! prop]ty 9 a3ord.e )!
  t]ms (! l1se b n1 = example1 6a prec$+
  ye> 9 : ! taxpay] acquir$ an op;n
  6l1se ! prop]ty or 0 all[$ 6d "w on x
  prior 6-m;e;t (! actual l1sehold
  p]iod4 ,! t5ant (a prop]ty r5t$ &
  o3upi$ )\t ! b5efit (a writt5 l1se :o
  makes capital exp5ditures on ! prop]ty
  is reg>d$ z hav+ a l1sehold 9t]e/ 9 t
  prop]ty on an oral basis2 pror,n ( ^?
  exp5ditures "!=e w 2 made ov] #e ye>s4
#ae4 ,=! purpose ( -put+ ! numb] ( #ab-
  mon? p]iods ref]r$ 6in p>agraph    #af
              ,,it-#dfd;,r           d#c
  #b7b7 ( ,s*$ule ,,iii1 x is provid$ 9
  p>agraph #c7b7 ( ,s*$ule ,,iii t ": !
  t5ant has "u ! l1se a "r 6renew !
  l1se1 "! % 2 tak5 96a3.t n only ! t]m
  (! l1se xf b al ! t]m (! f/ possi#
  renewal "!(4 ,p>agraph #b7b71 h["e1
  limits ! total numb] ( #ab-mon? p]iods
  t w 2 us$ 6#dj4 ,9 ! applic,n (
  p>agraph #c7b71 x is nec 6det]m9e t !
  t]ms =! possi# renewal p]iod >e
  e/abli%$ 9 ! l1se & t ! t5ant does n h
  m]ely ! "r 6negotiate ! l1se4 ,if !
  latt] is ! case1 x is 3sid]$ t a new
  l1se is 6be negotiat$ r ?an t ! exi/+
  l1se is 6be renew$1 & any p]iod
  specifi$ "!9 w n 2 tak5 96a3.t =!
  purposes ( p>agraph #b7b74 ,unc]ta9ty
  z 6! precise doll> am.t ( future
  r5tals is n 9 xf cause 6ignore !
  9itial l1se renewal t]m provid+ ! l1se
  3ta9s a firm -mit;t 0! l&"l 6renew at
  a future 8fair m>ket value0 r5t : is
  6be e/abli%$ 2t ! "pies4
                                     #ag
              ,,it-#dfd;,r           e#c
#af4 ,p>agraph #c7c7 ( ,s*$ule ,,iii
  assures t ! total deduc;ns all[a# 9
  respect (a unit ( capital co/ w n"e
  exce$ ! total capital co/ ( t unit4
  ,p>agraph #c7d7 3ta9s a simil> limit,n
  reg>d+ ! capital co/s 9curr$ 9 respect
  ( an 5tire l1sehold 9t]e/1 : makes x
  unnec 6attempt 6allocate ! proce$s (
  4posi;n ( "p or all (a l1sehold 9t]e/
  2t two or m units ( capital co/4 ,9 !
  case ( p>agraph #c7d71 ": at ! 5d (a
  tax,n ye> ! a7regate (! all[.es claim$
  9 previ\s tax,n ye>s 9 respect (a
  "picul> l1sehold 9t]e/ & any proce$s (
  4posi;n f t 9t]e/ equals or exce$s !
  capital co/ z ( t "t ( t 9t]e/1 !
  prorat$ por;n is = all subsequ5t ye>s
  deem$ 6be nil4 ,? does n prohibit
  all[.es = capital co/s 9curr$ 9 a
  subsequ5t tax,n ye> 9 respect ( t same
  9t]e/4 ,x %d 2 not$ t nei p>agraph
  3ta9s a provi.n 6d5y claims 9 respect
  (a l1sehold 9t]e/ t has expir$ or has
  be5 o!rwise 4pos$ (4 ,?us1 if !    #ah
              ,,it-#dfd;,r           f#c
  rules ( p>agraph 7d7 or 7e7 7see #ag
  2l7 >e n applica#1 ! #ej@3p t a
  taxpay] 0 una# 6claim 9 ! f/ ye> 9
  respect (a unit ( capital
--------------------------------------#d
  co/ 7see #ab abv7 may 2 claim$ 9 ! ye>
  foll[+ ! 5d (! amortiz,n p]iod det]m9$
  "u #ac abv1 ev5 ?\< ! relat$ l1sehold
  9t]e/ does n exi/ at t "t4
#ag4 ,p>agraph #c7e7 ( ,s*$ule ,,iii
  provides t ": ! undepreciat$ capital
  co/ (! :ole ( class #ac is nil at ! 5d
  (a tax,n ye>1 no fur!r all[.es w 2
  giv5 = capital co/s 9curr$ up 6t "t4
  ,reduc;n (! undepreciat$ capital co/
  6nil dur+ a tax,n ye> w n h ? e6ect1
  h["e1 if capital co/ 9 respect ( ei an
  exi/+ or a new l1sehold 9t]e/ >e
  9curr$ af t "t 2f ! 5d (! ye> 9 an
  am.t su6ici5t 6re-e/abli% a debit
  bal.e 9 ! class4
#ah4 ,except :5 sep>ate capital co/
  all[.e classes >e prescrib$ pursuant
  6sec;n #aaja (! ,regul,ns1 all     #ai
              ,,it-#dfd;,r           a#d
  l1sehold 9t]e/s (a taxpay] t fall )9
  class #ac =m a s+le class ( prop]ty1
  despite ! sep>ate calcul,ns requir$
  0,s*$ule ,,iii 9 respect ( ea*
  l1sehold 9t]e/4
#ai4 ,app5dix ;,i provides an example (!
  -put,n ( capital co/ all[.e ( class
  #ac prop]ty "u ,s*$ule ,,iii4

         ,build+s or ,/ructures
           7p>agraphs #bj-bb7
    
#bj4 ,! capital co/ (a l1sehold 9t]e/ t
  qualifies = 9clu.n 9 class #ac does n
  9clude t "p (a l1sehold 9t]e/ t is
  9clud$ 9 ano!r class 0r1son ( subsec;n
  #aajb7#e74 ,? subsec;n provides t a
  ref];e 6a prop]ty t is a 8build+ or
  /ructure0 9 ,s*$ule ,,ii (! ,regul,ns
  9cludes a l1sehold 9t]e/ 6! ext5t t !
  9t]e/
  7a7 0 acquir$ 0r1son (! fact t !
    taxpay]
                                     #bj
              ,,it-#dfd;,r           b#d
    7;i7 erect$ a build+ or /ructure on
      l1s$ l&1
    7;ii7 made an a4i;n 6a l1s$ build+
      or /ructure1 or
    7;iii7 made alt],ns 6a l1s$ build+
      or /ructure t sub/anti,y *ang$ !
      nature (! prop]ty1 or
  7b7 0 acquir$ af #aige or1 9 ! case (
    any prop]ty ( class #ca or #cb1 af
    ,novemb] #ah1 #aigd1 f a =m] lessee
    & t lessee or a pr$ecessor lessee _h
    acquir$ ! 9t]e/ by
    7;i7 erect+ a build+ or /ructure on
      l1s$ l&1
    7;ii7 mak+ an a4i;n 6a l1s$ build+
      or /ructure1 or
    7;iii7 mak+ alt],ns 6a l1s$ build+
      or /ructure t sub/anti,y *ang$ !
      nature (! prop]ty4
  ,! net e6ect ( ? require;t is t
  prop]ty describ$ 9 subsec;n #aajb7#e7
  is 9clud$ 9 ano!r class ( ,s*$ule
  ,,ii1 usu,y class #c4
                                     #ba
              ,,it-#dfd;,r           c#d
#ba4 ,x is di6icult 6provide g5]al rules
  z 6:at alt],ns 6a l1s$ build+ or
  /ructure h 8sub/anti,y *ang$ ! nature
  (! prop]ty0 & ? is re,y a "q ( fact t
  dep5ds on ! degree &! ext5t (!
  alt],ns4 ,! foll[+ may s]ve z a guide3
  7a7 ! 3v].n 0a t5ant ( "o room 96an
    (fice1 or ( "o room 96two rooms1 is
    n s* a *ange2
  7b7 a new /ore front1 9 xf1 is n s* a
    *ange2 b
  7c7 ! 3v].n 0a t5ant (a h\se 96a
    duplex1 a"p;t1 (fices or /ores is s*
    a *ange4
#bb4 ,z a result (! require;ts (
  subsec;n #aajb7#e7 (! ,regul,ns1 x may
  2 nec 9 "s situ,ns 6divide ! capital
  co/ (a l1sehold 9t]e/ 96m ?an "o
  prescrib$ class4 ,= example1 ": a
  taxpay] exp5ds an am.t 6obta9 a
  l1sehold 9t]e/ 9 l& & 3/ructs a build+
  t falls 96class #c1 ! capital co/ (
  acquir+ ! l1se w 2 9clud$ 9 class #ac
  &! capital co/ (! build+ w 2       #bb
              ,,it-#dfd;,r           d#d
  9clud$ 9 class #c4 ,an alloc,n (!
  proce$s ( 4posi;n1 if any1 ( s* a
  l1sehold 9t]e/ w al 2 nec & ? %d 2 d"o
  on a r1sona# basis4

              ,app5dix ;,i
    
        ,illu/r,n (! ,applic,n (
             ,s*$ule ,,iii
    
  ,z an illu/r,n (! applic,n ( ,s*$ule
,,iii1 assume t a taxpay]1 ^: busi;s
tax,n ye> is ! cal5d> ye>1 has _h no
l1sehold 9t]e/s1 b 9 #aigh agrees 6r5t
two adjo9+ vacant /ores 7;,x & ;,y7 =
use 9 ! busi;s1 ? 2+ l1sehold 9t]e/ ;,a4
,! l1se runs = #e ye>s f ,janu>y #a1
#aigi & 3ta9s "rs 6renew1 on /at$ t]ms1
= two fur!r #e-ye> t]ms4 ,9 ,decemb]
#aigh1 ! taxpay] is all[$ 6make c]ta9
alt],ns1 co/+ 4#d1jjj1 6/ore ;,x1 &
immly af gett+ posses.n on ,janu>y #a1
#aigi1 makes a4i;nal alt],ns 6x at a co/
( 4#aa1jjj4 ,9 #aigi1 al ano!r       #bc
              ,,it-#dfd;,r           e#d
/ore is r5t$ 7l1sehold 9t]e/ ;,b7 =a t]m
( #d ye>s f ,octob] #a & at once alt],ns
co/+ 4#f1jjj >e made4 ,9 #aihj1 !
taxpay] exp5ds 4#c1fjj on alt],ns 6/ore
;,y4 ,9 #aiha1 ! taxpay] no l;g] ne$s
/ore ;,y & is a# 6sell ! "p ( l1sehold
9t]e/ ;,a relat+ 6x = 4#b1ijj4 ,9 #aihc
! taxpay] r5ts ano!r /ore 7l1sehold
9t]e/ ;,c7 =a #e-ye> t]m & makes alt],ns
9 t ye> co/+ 4#aj1jjj4 ,al1 9 #aihc1 !
taxpay] 4poses (! rema9d] ( l1sehold
9t]e/ ;,a = 4#i1djj4 ,ag 9 #aihc1 !
taxpay] pays 4#a1hjj 6ext5d l1se ;,b =a
fur!r #f ye>s & 9 #aihd makes alt],ns
co/+ 4#g1ejj4








                                     #bd
      7,see ,pr9t$ ,copy = ,c4,s4    f#d
      #bb on ,l1sehold ,9t]e/ ;,a1
              ;,b1 & ;,c7
    
,footnotes3
  7,a7 ,0r1son ( p>agraph #c7a7 (
    ,s*$ule ,,iii1 ! #aigh exp5diture is
    deem$ 6h be5 made 9 #aigi &! #aigi
    unit ( capital co/ = l1sehold 9t]e/
    ;,a "!=e is 4#ae1jjj4
--------------------------------------#e
  7,b7 ,2c ( p>agraph #c7b71 ! numb] (
    #ab-mon? p]iods 6be us$ =! purposes
    ( sec;n #b is #aj 7orig9al l1se plus
    f/ su3e$+ renewal7 &! prorat$ por;n
    = ea* ye> w 2 4#a1ejj4
  7,c7 ,! #aihj unit ( capital co/ =
    /ore ;,y 74#c1fjj7 m/ 2 appor;n$ ov]
    only #i ye>s1 s9ce ? is ! numb] (
    #ab-mon? p]iods / rema9+ 9 ! l1se &
    f/ renewal :5 ^? co/s 7 9curr$2 &!
    prorat$ por;n ?us w 2 4#djj4
  7,d7 ,s9ce "! is an undepreciat$
    capital co/ = l1sehold 9t]e/ ;,a1 !
    taxpay] rema9s 5titl$ 6an        #be
              ,,it-#dfd;,r           a#e
    annual all[.e ( 4#djj 9 respect (!
    unit ( capital co/ relat+ 6/ore ;,y4
  7,e7 ,! all[.e = l1sehold 9t]e/ ;,c is
    re/rict$ 64#a1jjj &! ext5.n
    6l1sehold 9t]e/ ;,b 64#aej 0virtue (
    ,regul,n #aajj7#a77b77;i71 2+ "o-
    half (! 4#b1jjj & 4#cjj o!rwise
    deducti# "u ,s*$ule ,,iii4
  7,f7 ,p>agraph #c7d7 prohibits any
    all[.es 9 respect ( ? 9t]e/ 9 !
    #aihd & subsequ5t tax,n ye>s s9ce no
    bal.e rema9s =! 9t]e/4
  7,g7 ,! #aihd all[.e =! improve;ts
    6l1sehold 9t]e/ ;,b is re/rict$
    6#ej@3p (! prorat$ am.t ( 4#a1ejj4
  7,h7 ,al? l1sehold 9t]e/ ;,c has
    expir$ 0! 5d ( #aihh an a4i;nal
    4#a1jjj is availa# 9 #aihh 2+ ! am.t
    d5i$ 0! applic,n (! #ej@3p rule 9
    #aihc4
  7,i7 ,9 #aihh ! bal.e 9 ! class 2f
    tak+ ,,cca = t ye> is less ?an !
    ,,cca am.ts availa# = l1sehold
    9t]e/s ;,b & ;,c4 ,9 ^!          #bf
              ,,it-#dfd;,r           b#e
    circum/.es1 p>agraph #a7b7 ( ,s*$ule
    ,,iii re/ricts ! all[.e =! ye> 6!
    bal.e 9 ! class4 ,f9,y1 z t all[.e
    reduces ! undepreciat$ capital co/
    (! class 6nil1 no fur!r all[.es c 2
    made 9 subsequ5t ye>s1 0r1sons (
    p>agraph #c7e71 9 respect ( any (!
    capital exp5ditures ref]r$ 6in !
    =ego+4
  













                                     #bg