http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/31265/index.do 
Gélinas v. The Queen[1] (August 8, 2013) was an appeal from an assessment for alternative minimum tax arising out of rental losses.
[2] There is no disagreement as to the facts. The disagreement relates to the computation of the alternative minimum tax and, specifically, to whether, in computing the minimum tax, $338,300 must be added to the taxable income, as this is the amount of a loss incurred in 2008.
[3] The appellant holds several rental properties and the parties agree that the table at paragraph 11 of Annex A of the reply to the Notice of Appeal reflects all the income and expenditures for these rental properties for the period of 2006 to 2008 inclusive.
[4] Six important facts should be noted:
a) In 2008, the appellant had a rental loss of $469,975.
b) The other years saw a net income varying from approximately $1,000 to $240,000.
c) In 2008, the appellant had an exceptional expenditure of nearly $900,000 to keep a client.
d) There is no dispute that there were no other expenditures comparable to the $900,000 in the period from 2006 to 2010.
e) There was one interest expenditure of $1,073,792 in 2008.
f) In the other years of the period, the interest expenditures varied from approximately $954,000 to $1,113,000.
The gist of the issue before the court was that the appellant argued that his loss in 2008 was attributable to the exceptional expenditure of $900,000 in 2008, not carrying charges on the real estate:
[8] Line 252 (“losses other than capital losses from other years”) from the appellant’s T1 form for 2009, shows an amount of $338,300.
[9] Mr. Renaud concluded that this loss of $338,300, which came from the loss incurred in 2008, was not attributable to carrying charges or the interest, because, in other years from 2006 to 2010, there were no losses despite more or less comparable carrying charges. According to the appellant, the loss resulted from the exceptional expenditure of $900,000 in 2008. Therefore, he did not add the $338,300.
[10] The appellant claimed that this was the correct approach and, thus, that the appeal should be allowed. In the Minister’s view, however, this amount should be added.
The court rejected the appellant’s approach and dismissed the appeal:
[15] The issue here concerns the computation of the taxable income amended within the meaning of section 127.51(B) above.
[16] The effect of paragraph 127.52(1)(b) is to limit, among other things, the amounts deducted for the amortization and for the interest paid. For the computation of the amended taxable income, the total of the deductible amounts subject to paragraph 127.52(1)(b) is limited in such a way that the total deductible for these amounts des not create a loss. For example, if there is an interest expenditure of $100,000 and there is a further loss of $40,000 for the purposes of the minimum tax, the deduction of interest will be limited to $60,000 so that the income drawn from the rental property is set at $0. The provision does not require that the amortization or the interest is the cause of the loss.
[17] Furthermore, if we review the appellant’s T1 form for 2008,[1] we see that this is exactly what occurred. At line 126 of the return, we see that for all the rental properties there was one rental loss of nearly $470,000. In form T691, at lines 5 to 7, we see that there was a deduction of interest of nearly $1,073,000 and that for the purpose of the computation of the amended taxable income, the deduction of interest was decreased by approximately $470,000 and income was increased by the same amount for the purposes of the alternative minimum tax.
[18] As for the year under appeal, paragraph 127.52(1)(i) applies. This paragraph means that when the losses of other years are taken into account in the computation of the amended taxable income, paragraph 127.52(1)(b) must be applied to the computation of losses in these previous years.
[19] The loss of $338,300 at line 252 of the appellant’s T1 form for 2009 was incurred in 2008. This loss would not have been incurred without the deduction of interest. Thus, $338,300 must be added in computing the amended taxable income for 2009 for the purposes of the alternative minimum tax.
[20] For these reasons, the appeal is dismissed with costs.
[1]2013 TCC 250..