T2- filing capital gain deferral- Expropriation

I need help filing T2 for one of my clients.

he has expropriation from the city, they took his property to city use.

His lawyer told him you can defer the tax as this is involuntary disposition

I need hep how to reflect this on the taxcycle T2 file

Please contact me on my email imad@experttax.ca

Regards
Imad

There are provisions in the ITA [13(4) and 44(1)] that allow the deferral of the capital gain in such situations. See link below. Usually the taxpayer will have to acquire a replacement property, and that effectively “takes over” the cost of the original property (see Example 3 of the Folio). If no replacement property is acquired, then the taxpayer must report the capital gain, but that can be delayed up to 2 years in certain cases. See paragraph 1.24 re: how to effect the election - might need to send a letter to CRA.

https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-3-property-investments-savings-plans/folio-3-capital-transactions/income-tax-folio-s3-f3-c1-replacement-property.html