where does deferred income from the sale of a business go on a Return?

Individual sold his business in 2015 and deferred $79000.  I'll claim it on his 2016 but do I claim it as other income?

Answer

Hello there,

You have to complete schedule 3 to calculate the taxable capital gain in 2015, based on the type of property disposed. Make the necessary calculations on the form to arrive at line 191 of schedule 3, this will result in all total gains.

Then complete form T2017 to calculate the amount of allowable reserve. Make the necessary calculation to arrive at line 6706 of T2017 form, this will give the maximum allowable reserve, transfer that amount to line 192 of schedule 3. Make sue it is negative (between brackets) and deduct from gain amount . This will give result of line 197 of schedule 3 with total capital gain after deducting allowable reserve.

In 2016 you will have to add the total capital gain reserve amount to income and report it.

Hope this helps.

Hesham

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