Where to declare capital gain on T1 when LP investment is sold and payments were deemed Return of Capital. i.e. 100,000 investment paid 8,879 as ROC, ACB is now 91,121?

[TurboTaxSusan]

Return of Capital (ROC) is not taxable when received. Instead, you would use the ROC distribution to reduce the Adjusted Cost Base (ACB) of your investment. So, your ACB would be  91,121 - 8,879.

[a_zagar]

Where on the T1 do you report the capital gains when selling this investment?

[TurboTaxSusan]

You would put Capital Gains/Losses on Schedule 3.

[a_zagar]

On which line exactly on Schedule 3 would you show this capital gain?  To clarify, invested $180,000 in the LP in 2022 and throughout the year received $13,222.74 distributions as Return of Capital.  In 2023, the original $180,000  investment was returned and a T5013 was issued with boxes 105, 106, and 113 filled in, and nothing in Box 30 (Total Capital Gains/Losses).  My understanding is that the ROC must now be declared as Capital Gains on the income tax return.  But where exactly do you do this?  I see nothing on Schedule 3 that fits this situation, or is there somewhere else on the return where you would report this?

[TurboTaxSusan]

 There is a section on the Schedule 3 for publicly traded shares and similar assets. Fill in the columns that are applicable to you. 

If you are not sure if you need to report the ROC as part of your ACB or as a capital gain, then it would be a good idea to contact the Canada Revenue Agency (CRA) and confirm what you need to do with them. 

If you are in Canada or the United States, you can call the CRA at 1-800-959-8281. If you are elsewhere, you can call 613-940-8495. This page has more ways to contact the CRA: Contact the Canada Revenue Agency