2010 Ruling 2009-0330901R3 - Reorganization of XXXXXXXXXX -- summary under Subsection 107(2.1)

A unit trust (Trust 1), after selling units of a subsidiary LP to its parent (Subco) in consideration for a note, purchases for cancellation most of its units held by Subco in consideration for the transfer to Subco of debt owing by Subco. Rulings that s. 107(2.1) applies to this transaction – but that ss. 53(2)(h)(i.1)(A) and 53(2)(h)(i.1)(B)(I) will apply such that the ACB of the Trust I Units to Subco will not be reduced by the amount of the capital gain which was thereby distributed to Subco, and that Subco will realize a capital loss.