The 159(5) election permits an estate to pay “death taxes” (taxes owing as a result of the 70(5) deemed disposition) over ten years. The election must be filed, however, by the due date for the deceased’s terminal return. The election form requires a calculation of the death taxes resulting from the deemed disposition of property. What happens if the proceeds of disposition cannot be determined in a timely manner? For example, what if X dies owning shares of Opco, and estate litigation prevents the executors obtaining a valuation in a timely manner? Neither the Income Tax Act nor the CRA seem to allow for late-filed elections. The authors suggest filing a blank form as a possible solution.
Nadia Rusak and Manu Kakkar “Subsection 159(5) Election: Stuck Between a Rock and a Hard Place” 20:2 Tax for the Owner-Manager (April 2020)
