14 November 2007 Internal T.I. 2007-0254601I7 F - Paiement incitatif - Bon de souscription -- summary under Subparagraph 12(1)(x)(iii)

As part of transactions for a sale of a business of Aco to a purchaser (Bco) for a cash sale price, and the entering into of an agreement for the provision of services by Aco to Bco (the “Operating Agreement”), the parent of Bco (Cco) agreed to issue a warrant on its shares to Aco. After noting that “a payment that is made to induce the recipient to do something will generally be considered an inducement payment,” the Directorate found that the value of the warrant was to be included in Aco’s income given that inter alia “[a]ccording to Aco's minutes, it appears that the warrant induced Aco to enter into the operating agreement for a period of XXXXXXXXXX years instead of a shorter period” and only the cash consideration was treated by the parties as the sale price for the assets. The warrant qualified as “any other form of inducement.”