Form T2058 (partnership disposition election)

Partners meet this form when partnership property is moved into a corporation for consideration that includes shares. The CRA describes T2058 as the form for a Canadian corporation and the members of a partnership to elect jointly under subsection 85(2). It is the partnership counterpart of the section 85 election form (Form T2057).

What subsection 85(2) requires

• The partnership disposes of partnership property to a taxable Canadian corporation for consideration that includes shares of the corporation’s capital stock.
• The property is of a kind described in paragraph 85(2)(a); read that paragraph, because it excludes some eligible derivatives and, if the partnership was not a Canadian partnership, real or immovable property.
• The corporation and all the members of the partnership elect jointly, in prescribed form and within the time referred to in subsection 85(6).
• Paragraphs 85(1)(a) to (i) then apply, with such modifications as the circumstances require, as if the partnership were a taxpayer resident in Canada.

What to ask

Ask whether every member signed, whether the election was filed in time, and what amount was elected. Subsection 85(3) also deals with a partnership wound up within 60 days after the disposition, on conditions set out in the section. For the wider picture, see whether a section 85 rollover can defer tax on an asset sale.