A client sold shares of a corporation to a third party on March 1, 2026. There is no specified time on the purchase and sale agreement. I prepared the T2 with a February 28, 2026 year end and entered March 1, 2026 as the date of change in control. The software is giving me a warning that the date of change in control must be within the taxation year. Should I ignore the warning?
A change of control results in a deemed taxation year-end immediately before the acquisition of control. Therefore, if the shares are sold on March 1, the change of control is considered to occur on February 28.
Thank you!
And, if the change in control occurred after year-end (i.e. March 2) then it did not occur DURING the taxation year, so it should not be reported on that T2.