In Rudolph v R, 2024 TCC 148, the Tax Court held that the taxpayer had not disposed of shares in 2007 as alleged by the CRA. Instead, the taxpayer had received a loan from the purchaser in 2007 that was discharged in 2008 by a transfer of the shares to the purchaser. The taxpayer, then, was treated as having disposed of the shares in 2008.
The Court also agreed with the taxpayer that, given the nature of shares sold and some related options, the gain realized was on income account.
Finally, the Court denied a deduction for interest paid on borrowed money because, among other things, the taxpayer did not correct an answer given on discoveries, contrary to Rule 98, and did not provide a satisfactory answer to an undertaking in a timely manner.
For a summary of this case, see Hannah Boureois “Rudolph v. The King, 2024 DTC 1109 (Tax Court of Canada) — Tax Court determines share sale to be adventure or concern in the nature of trade” Tax Topics 2720 (December 17, 2024)
