Asset Sale – Price Allocation

In the case of depreciable property, the vendor will be taxable on recapture, and no reserve is available. Recaptured depreciation is considered to be active business income for the purposes of the small business deduction. If a capital gain arises, the five-year capital gains reserve may be available if there is a balance of sale.Note2 A terminal loss may arise on depreciable property when the purchase price is less than the undepreciated capital cost of the property.
On the disposition of non-depreciable capital property, a capital gain or capital loss maybe realized or incurred. For the purchaser, the amount paid will represent the capital cost of the property.
http://www.cch.ca/newsletters/TaxAccounting/January2013/index.htm#Notes
Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Recaptured depreciation 13 (1)
Goodwill (34)
Class 14.1 — transitional rules P120
Taxable Capital Gains and Allowable Capital Losses p332

Change to goodwill tax
Eligible Capital Property is the tax term for an intangible asset held by a taxpayer.
On March 22, 2016, the new Liberal Minister of Finance, the Honourable Bill Morneau, tabled that government’s first budget. Included among the proposed changes was a plan to repeal the existing Eligible Capital Property regime and to fold ECP deductions into the existing Capital-Cost Allowance framework under the newly proposed class 14.1.

At the same time under the proposed rules the sale of ECP after January 1, 2017 will still be characterized akin to a capital gain. As such, 50% of the gain will be non-taxable and eligible for capital dividend treatment, while the remaining 50% will be characterized as income from investment, or passive income. The characterization of the 50% of the ECP sale as passive income means that any such income will be subject to Part IV tax and taxed at the high corporate rate of 50.67% in any holding corporation.

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