29 October 2010 Internal T.I. 2010-0357241I7 - Exchangeable Debenture -- summary under Paragraph 20(1)(c)

In response to a query as to the deductibility of interest on a note which was exchangeable into "Underlying Shares," CRA indicated that interest on the portions of the note whose proceeds were (i) put into a collateral account to pay interest on the note, (ii) lent to a trust of which the taxpayer was both a capital and income beneficiary, or (iii) used to pay legal fees incurred in issuing the note, was deductible.