The Estate of Zoltan Kokai-Kuun (“Zoltan”), the appellant, appeals the reassessment for the 2008 taxation year made by the Minister of National Revenue under the Income Tax Act. The Minister included into income a capital gain in the amount of $235,755.60 (the “Gain”) from the sale of 40 acres of land situated at 211 Howards Road, Vernon, British Columbia (the “Land”) and disallowed deductions for interest, carrying charges, property taxes and levies pertaining to the Land.
 The evidence established that the Land was purchased as an investment to sell it at a higher price because of its proximity to a golf course. Anthony admitted that during the 16 years that Zoltan owned it, he did not use it in business nor produce income from it. Rather, Zoltan and Agnes, his spouse since 1997, visited the Land once or twice per year.6 Similar to Anthony’s testimony, Ms. Villeneuve, Ms. Lariviиre and Patrick also said that the Land was purchased for investment purposes with the hope that it would increase in value. Patrick said that Zoltan had described it as a “gold mine.”
 In Stirling, the Federal Court of Appeal held that interest on money borrowed to acquire property for the purpose of making a capital gain, rather than an income-earning purpose, is precluded, on disposition, from forming part of the cost of the property and cannot be added to the acb [adjusted cost base].
S. 18(2) limits the deduction of interest and property taxes on vacant land to the income from the land. Stirling is a 1985 decision of the FCA that had nothing to do with land, does not refer to s. 18(2) and does not refer to ITA 53(1)(h). ITA s. 53(1)(h) allows the inclusion in the adjusted cost base of land of the amount of interest expense that was disallowed by s. 18(2).
Nonetheless, Justice Lyons also, as a secondary ground, rejected the Appellant's evidence that it had interest expense related to the land. So, her decision, though seemingly wrong on this point of law, could be right overall. Still, there might be a question about whether she was overly broad in treating none of the interest expense as relating to the land.
See Kokai-Kuun Estate v. The Queen, 2015 TCC 217 (Lyons)