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of <h1>Understanding Section 51: Forfeited Advance Money Pre-2014 Deducted; Post-2014 Taxable as Income from Other Sources.</h1> Section 51 of the Income Tax Act addresses the treatment of advance money forfeited during negotiations for transferring a capital asset. If forfeited before April 1, 2014, the amount is deducted from the asset's acquisition cost, fair market value, or written-down value. Post-April 1, 2014, forfeited sums are taxable as 'Income from Other Sources' for the seller. Forfeiture of shares due to non-payment results in a short-term capital loss. For buyers, forfeited amounts are not considered a capital loss, and compensation for a failed deal is not treated as capital gain.
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