We have a client who disposed of shares in 2018 and claimed a reserve. Let’s say the proceeds were 100K, the capital gain was $80K and the reserve taken was $5K in 2018. If in 2019, the client receives $4K and won’t be receiving any more, then the client is short $1K of overall proceeds. The reserve is still $5K, but we know the client should only be taxed on $4K more, rather than the full $5K. Does anyone know how this would be reported on S3 and T2017?
Thanks for any help offered.