Taxpayer cannot pay their outstanding debt to a creditor $4,520. Creditor forgave outstanding amount.
S80 ITA: Amount must use up against “unapplied non-capital losses of preceding years” (loss carryforwards)
DT AP $4000.00
CT HST $520.00 (reversing out ITC)
CT Other income - Debt forgiveness $4,520.00
To clear the AP amount
Corporation loss carryforward balace: $3,000.00.
$4520.00 - $3000 = $1520.00 remaining
According to S80, any remaining amounts must be used to reduce UCC of depreciable property.
An asset class that has a UCC of over $10,000.00 can be lowered by the remaining $1,520.00.
Do any of these Other income - debt forgiveness amounts go on line 101 of HST return?