Where a partnership’s debt obligation is settled for less than the amount owing, the result can be an income inclusion at the partnership level under s. 80(13). This income is then allocated to the partners under s. 96(1). The elective rule in s. 80(15) essentially allows each of these partners to claim an offsetting deduction. If the elective deduction is claimed, the partner is deemed to have debt forgiveness equal to the elective deduction claimed. This mechanism allows each partner to apply the debt-forgiveness rules in s. 80 to the extent of the deducted amount. In 2016-0666481E5 (recently released), the CRA confirmed that the election in s. 80(15) is available in a tiered-partnership structure (see page 8). Specifically, the CRA confirmed that a top-tier partnership is considered to be a partner of a bottom-tier partnership by virtue of s. 102(2), and thus the top-tier partnership can make the election under s. 80(15) as a partner. Further, if the deemed debt-forgiveness in the top-tier partnership – as a result of the s. 80(15) election – results in an income inclusion to the partners of the top-tier partnership under s. 80(13) and s. 96(1), those partners can in turn make an election under s. 80(15).